Autohome Inc.

Ladies and gentlemen, thank you for standing by for AutoHomes first quarter 2021 earnings conference call. At this time, all participants are in a 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 objection, you may disconnect at this time. It is now my pleasure to introduce your host, Ajit Chow, AutoHomes IR Manager, Ms. Chow, You may begin.

Thank you, operator. Hello, everyone, and welcome to Auto Home's first quarter 2021 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. On today's call, we have Chairman and Chief Executive Officer, Mr. Chuan Long, Co-President, Mr. Haifeng Xiao, Chief Financial Officer, Mr. Jing Zhou, and Chief Technology Officer, Mr. Xiao Wang. After the prepared remarks, Mr. Long, Mr. Xiao, Mr. Zhou, and Mr. Wang will be available to answer your questions. Before we begin, please know that the discussion today will contain forward-looking statements. made under the safe harbor provision of the U.S. Private Security Legitations Reform Act of 1995. Forward-looking statements are subject to risks 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 filings with the Securities and Exchange Commission. AutoHome does not undertake any obligation to update any forward-looking statements, except as required under applicable law. The earnings press release in this call also includes discussions of certain unaudited non-GAAP financial measures. Our press release contains a reconciliation of the non-GAAP measures to the most direct comparable GAAP measures and is available on AutoHome's IR website. As a reminder, this conference call is being recorded. In addition, a live and archived webcast of this earnings conference call will also be available on Autohome's IR website. I will now turn the call over to Autohome's chairman and the CEO, Mr. Long.

Thank you, Agia. Hello, everyone. Thank you for attending today's conference call.

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

Thank you. I'm pleased to report a solid quarter, with total revenues growing 19.1% to RMB 1.84 billion.

Revenues from our online marketplace and other business increased by 74% year-on-year and contributed to 29.3% of total revenues. Data products continue its strong growth trajectory with revenues increasing 64.9% year-on-year, primarily driven by increasing contribution from OEM data products. In particular, TTP's revenue contribution was larger than our prior expectations. Adjusted net income in the first quarter continued to expand up 13.7% year-on-year.

At the beginning of the discussion on the specific performance, I would like to share with you some of our thoughts on the industry pattern and self-development. We see that the automotive industry is undergoing some changes. The challenges of the red-light environment, the epidemic-induced movement of automotive sales, have caused the automotive industry to transform. Before we start discussing our results in detail, I'd like to share some thoughts about industry lending.

As a whole, and some of our own recent developments, we are witnessing that changes are coming to the automobile industry. In the face of a challenging macro environment and fluctuation in automobile sales stemming from the pandemic, the auto industry has started to step up efforts towards a digital transformation. Emerging premium electric vehicle brands as the traditional auto manufacturers' investment in a new energy vehicle have also accelerated the growth in the NEV space. In addition, some new players with extensive expertise in Internet services are going into the smart automobile market, intensifying the competition in this field. All these trends are reshaping the auto market landscape, including the overall industrial value chain.

In the face of the new trend of the industry and the market, on the one hand, in the past two years, we have continued to optimize and reduce low-profit businesses, such as the local insurance business, and support the price competition to ensure a good business structure. On the other hand, we have designed the 4.0天罗地网 strategy since last year. Currently, we are also doing strategic upgrade planning to further diversify this strategic implementation plan. to better grasp the opportunity for industry development and achieve long-term high-quality development. We expect to release a new implementation plan in the second half of this year. We believe that with more than 40 million large and active user base, solid and stable business platform, and innovative capacity to lead the industry, as well as rapid and efficient implementation, Qizhe will be able to open up new growth space and achieve self-improvement.

Against the backdrop of this new market and industry dynamic, on one hand, in the past two years, we have been consistently optimizing and trimming low-margin businesses, such as offline insurance business, while staying away from price competition to ensure a high-quality business portfolio. On the other hand, we rolled out our 4.0 strategies last year, namely AI, big data, and cloud capability, and SaaS strategies. Now we are also planning an upgrade of these strategies by fine-tuning our action plans to the execution as we seek to better capture industry opportunities and achieve continued high-quality development. We expect to announce updates on these action plans in the second half of this year. As a platform with a massive and engaged user base of more than 40 million daily active users, solid business fundamentals, industry-leading innovative capabilities, as well as effective and strong execution capabilities, we are confident that Autocom can grow beyond its current standing and tap into new growth potential.

Next, let's move to our Q1 results. In the first quarter, the new energy vehicle market expanded the upward growth trend that began in the second half of last year.

As sales volumes rose year-on-year and accounted for over 9% of total new passenger vehicle sales, compared to approximately 6% for full year 2020, the prosperity of the NEV market brought new growth opportunities for us. In the first quarter, we expanded and deepened our cooperation with NEV automakers. Revenue from these automakers increased close to 170% compared to the same period of last year.

In terms of second-hand car business, we continue to explore the second-hand car business model, play a platform advantage, integrate the current integrated configuration service resources, and serve the low-cost consumers. In the first quarter, the daily sales of cars increased by 160%.

In terms of our used car business, we're exploring further opportunities in this area, leveraging our capabilities in financing and relevant supported service resources to empower our customers and serve our users. In the first quarter, the transaction volume for TTP Car Inc. increased by 160% year-on-year.

The car manufacturer launched the smart market in 2020. Combined with VR, new car management, small videos, smart activities, etc. More than online products and offline operations. Let the new car in the factory get a long exposure in all directions. Increase the fun of the new car in multiple ways. In the first quarter, 31 companies bought our data products. The new car in the factory is very popular. Moving next to our product advances,

Recently, we unveiled a new version of our intelligent new car launch, integrating VR showrooms and mini video products, while combining our intelligent activities with offline operations. This is allowing new car model debuts to gain more precise exposure and attract more auto fans. In the first quarter, a total of 31 automakers utilized our data products and the total number of programs for intelligent new car launch and intelligent marketing solutions with more than 30. By adding private domain operations and functions, including WeChat meeting programs and marketing, as well as promotional tools to the existing public domain functions, our incremental leads product, SmartShop 3.0 version, works as a marketing platform for dealers to capture private traffic, their own users, and obtain incremental leads.

In terms of C1 products, Qishijia's main app has recently been updated. On the product of a user's front, we recently upgraded our main app

to offer a streamlined user interface while optimizing the design that caters to the younger generation. All these efforts help us further enhance the user experience. In the meantime, we also took steps to improve the quality of our sales leads by requiring an SMS verification when users leave their cell phone numbers with us, which further strengthens the protection of user privacy and security. 终上所述,汽车自家第一季度开局良好。

The core business is stable. New business growth is strong. Data product revenue is re-enhanced. Strong growth. Day-to-day parking also strengthens our second-hand car business. Product-related updates and replacement proposals further strengthen our service level. These achievements reflect the leading position of the car industry in the key field. Looking forward to the future, we will always strive to provide the best service for users and customers, and bring long-term value to shareholders.

In conclusion, we have a solid first quarter driven by our resilience, core business, as well as robust and new initiatives. Data products, once again, delivered strong revenue growth while TTP bolstered our used car business line. We also accelerated our product innovation and iteration in order to further enhance our overall service quality. This achievement reflects Auto Home's leading position in this key area. Going forward, We remain committed to better serving the interests of our users and customers and delivering long-term value to our shareholders.

With that, I will now turn the call over to our CFO, Jun, for more business details and a closer look at our fifth quarter financial results.

Thank you, Chen. To start, let me go through some business metrics. In March 2021, the number of average DAUs who access our mobile websites, primarily APPs and mini-apps, grew further to 42.3 million, representing an increase of 33.3% compared to the prior year. For the first quarter, all of our OGC, PDC, UDC, and other content categories in the solid user contraction. Now, I will talk to you through the key financials for the first quarter. Please note that, as with prior calls, I will reference RMB only in my discussion today, unless otherwise stated. Net revenues for the first quarter were RMB 1.84 billion, a 19.1% increase compared to the corresponding period last year. For a detailed breakdown, media services revenue were $605 million, lead generation services revenue were $698 million, and online marketplace and others revenue increased by 74% year-over-year to $539 million, primarily driven by the impact of consolidation of TTP and increased contribution from data products. Now moving on to costs. Cost of revenues was $243 million compared to $178 million in Q1 last year. The increase was primarily attributable to the impact of consolidation of TTP. Gross margin was 86.8 percent in the first quarter compared to 88.5 in Q1 last year. Turning to operating expenses, Sales and marketing expenses in the first quarter were $683 million compared to $524 million in Q1 last year. The increase was primarily attributable to the impact from consolidation of TTP, increased execution costs to support customers and business developments. Now, P&D expenses were $305 million compared to $292 million in Q1 2020. Increase was primarily driven by higher investment in research and development activities. Finally, G&A expense were 129 million compared to 89 million in Q1 2020. The increase was primarily attributable to the impact of consolidation of TTPs. Overall, we delivered operating profit of 567 million for the first quarter, compared to $586 million in the corresponding period of 2020. Adjusted net income attributed to auto home income was $735 million for the first quarter, compared to $646 million in the corresponding period of last year. Now GAAP basically diluted earnings per share for the first quarter, or RMB 1.52 compared to RMB 1.36 and RMB 1.35, respectively, in the corresponding period of last year. Now, GAAP basic and diluted earnings per ADS for the first quarter were RMB 6.08 and RMB 6.06, respectively, compared to RMB 5.43 and RMB 5.4, respectively, in the same period last year. As of end of Q1 2021, our balance sheet remained very strong with cash, cash equivalents and short-term investments of $17.27 billion. We generated operating cash flow of $546 million in the first quarter of 2021. As a listed company on the Hong Kong Stock Exchange, we will follow the common practices adopted by Public companies in the Hong Kong market, as a result, will no longer provide guidance on revenues going forward. In March, Autohome successfully listed on Hong Kong Stock Exchange. Additionally, Autohome's Hong Kong stocks will be added to Hanson Tax Index and Hanson Composite Index, marking a key milestone in our history and opening a new journey for Autohome. In the past few years, Auto Home has been leading the development of the industry. As we move forward with our strong balance sheet and profitability, we are confident that Auto Home will bring more value to both our users and customers and deliver long-term return and value to our shareholders as well. With that, we're ready to take your questions. Operator, please open the line for Q&A.

Thank you. We will now begin the question and answer session. Please note that each participant is limited to one question. Shall you have more than one question to pose, colleagues will join the queue again. Participants with questions to pose may now press 0 by 1 on the telephone keypad and you will be placed in the queue. To cancel the queue, please press 0 followed by 2. Once again, you have any question to pose, press press 01 on the touchpad. You will place it in the queue. To cancel the queue, press press 02. First question is Melinda Chuang from Bank of America Security. Please go ahead.

Thank you. Thank you for taking my question. Can management share your thoughts on the business outlook for the second quarter and the second half this year? Especially for the second half, because previously management mentioned that company will announce action plans for strategic upgrades in the second half. So can you give us a hint on what kind of areas will companies focus on and what kind of products or services upgrades may be taken? Thank you.

In the middle, there are many related characteristics. For example, the fluctuation of sales is very intense. We can see that in the first quarter, the entire sales has grown significantly. It was the same as last year, but it also had an impact on the epidemic. In the first quarter, we had a 69% growth in sales. However, in April, it suddenly fell back to 12%. It's a 12-year growth. Now we see that in May, the previous three weeks, the sales have become a negative growth compared to last year. The wholesale is a negative growth. So this kind of sales fluctuation is actually very big. This is one of the characteristics. The second characteristic is that due to the epidemic last year, it is actually for the digital transformation of our car. This is the second feature. The third feature is about our new energy. The sales of new energy vehicles are now growing very fast. We can see that from January to April, the sales of new energy cars are growing at the same rate. It is very fast. There is 288%, which is close to 300% of this growth. Another one is about our Internet.

Okay, thank you for raising this question. I'd like to take the question about the strategic upgrading. You know that in China, our auto market changes very fast and we do witness three different characteristics. The first characteristic is that the sales volume for auto has been volatile and has been very, you know, dramatic changes over the past several quarters. You know, in Q1, you can see that there's a very big growth comparing with the same period of last year. There's a growth of 69%. Of course, there's also the factor caused by the COVID-19 pandemic. And in April, we can see that we only have the growth of about 12%. So the growth jumped from 69% to 12%. And for the first three weeks of May, actually for the wholesale business, there's a negative growth year on year. So the second characteristic is that because of COVID-19 pandemic, the digital transition of those automakers has been accelerated. And the third characteristic is that you can see the sales of NEV has been growing up very rapidly. And from January to April of this year, you can see that the sales of the new electric passenger vehicle increased by 288%, almost 300%. So there's a lot of new players, including some of the, you know, some of the intelligent, some of the, you know, premium car brands, as well as some of the car makers with very good expertise on Internet services. They are all entering into the EV sector.

The change in the automotive industry is very rapid. In fact, in the process of our contact with automotive manufacturers this year, we also found that there have been many changes in the automotive main factory. For example, many of our automotive main factories are actually directly linked to users. At the same time, there are also some We are considering a long-term, stable, sustainable and healthy development. So we are doing this kind of upgrade strategy. So from last year, we have already started this 4.0天罗地网 strategy. At the same time, we also find that the entire auto industry has been developing as well as changing very fast.

When we get in touch with the auto makers with those auto OEMs, we also discovered these changes. For example, a lot of the auto makers, they have been directly connecting with the users, and some of them directly connected with the operation of the users. At the same time, the iteration of the products of the auto OEMs is also accelerated. So for auto home, we think that we're dedicated to pursue long-term, sustainable, and healthy development of the auto market. So we considered about the upgrading of our strategy. Last year, we launched our 4.0 strategy, and this year, based on the above-mentioned new changes on the market, we are considering about the upgrading of the strategy.

As a company that has upgraded its strategy, According to the plan of Autohome,

We are actually going to announce the update of the fine-tuning of the action plan to the execution in the second half of this year. So actually, we are dedicated to have the long-term sound stable as well as a good development, high-quality development in the longer term. 新能源的部分是不是请邵总补充一下?

Okay, so this year, let's see. First of all, we still maintain the expectation of the Chinese car market at the beginning of the year. That is, its growth will be about 10%. But at present, there should be two situations that we are still observing. One is the shortage of chip, the chip of the car class. Actually, for this year, we're still maintaining our

estimate about the auto market growth in China at the very beginning of the year, which is the estimate of a growth of about 10%. And actually, we still have to observe the changes and development on the market. The first thing we have to take notice is about the shortage of the auto level chief production. There's a shortage for a while. And second thing, we have to take notice of the relapse of COVID-19 in specific geography. And the second thing is that I think that for the auto OEMs, their budgeting of the whole year is closely related to the sales volume of the cars. So this is the two points I'd like to add.

Operator, next question, please.

Thank you, Miranda. Next question is 81 from Morgan Stanley. Please go ahead.

Thank you, Mr. Long and Mr. Do, for accepting my question. I have a follow-up question. You mentioned that in April, the sales of the whole car slowed down. There may be a decline in the previous three weeks of May. I don't know if it's because we can't provide the guidance of the second quarter I don't know if more or less will be affected from the income perspective. I would like to see if the next half of the year, the core of the media service and Li Jian will be affected more or less. This is a follow-up question. The second question is that we take pictures every day. As you said in the previous talk, the contribution of income is actually higher than the expectation of the management level. Can you please ask, in general, what is the future strategy of our T&B second-hand car? And then why is the expected income higher than expected? And then what will happen to the next few quarters? And then the entire second-hand car industry, is there a better recovery in it now? Okay, I'll translate it myself. Thank you for taking my question. My first question is about your comments on the new car sales in April, which has been a little bit slowed down. And in May, first three weeks of May, actually, you see a year-over-year decline in terms of new car sales volume. So would you please give us some color how this will impact our revenue in the second quarter? That's the first question. And second question is that, you have been talking about in the prepared remark that the TTP car has delivered a large than expected contribution to your top line so can you give us a little bit more color in terms of firstly is how this used car industry you know have been so far this year and secondly is that how did you achieve the, you know, how they expected, you know, the top-line growth of the TTP car, and what's your strategy in the overall, you know, used car kind of sector? Thank you very much. 这个是关于芯片和对汽车影响和天天拍这个二手车行业的少总。

It should be like this. From March to April, then April, including the first three weeks of May, it is a trend for new cars to go down. In this trend, there are two special reasons for this year. One is the chip. The second is partly due to the impact of the epidemic. From these two reasons, we think that, first, there is a 10% increase in the number of new car test predictions for us in the beginning of the year. On this, there must be a reason to pull down. From the perspective of Zhijia, I think the budget of the main factory is still following the sales. On the advertising budget, I think we will definitely be affected. But we will also continue to explore other businesses. I think this is the first question. The second question is about second-hand cars. Second-hand cars, from January to April, China's second-hand cars have a total increase of 79. It is far higher than a new car. The second one, in the second-hand car, I think this one is... So to answer your first question, you can see that in the first few months,

of this year, in particular from January to April, as well as the first three weeks of May, there's a declining trend of the new car sales. So I think there are basically two reasons for that. The first one is the shortage of the chips, and the second one is COVID-19 pandemic. So as we estimated the growth for the whole year, which was about 10%, you can see that so far in comparison, there's a downward trend. And in Auto Home, we think that for the automakers, their budgeting is closely related to the sales volume. As a result, you can see that our advertising business is affected because of that. However, we're still exploring the potential of other businesses. And your second question is about the used car business. You can see that so far, the growth of the second-hand car, the used car, is higher than new car sales. Last year, we acquired TTP, and now we are thinking about the cooperation between Auto Home and TTP. That is to say, we hope that the business of the used car in Auto Home as well as TTP, we can form some action. We can form some synergy. The first one is that in terms of the used car business, we still stick to the platform-based business model, which is actually focusing on the light asset.

I also want to add two points. Okay, let's talk about it.

Our second-hand car business is filmed every day. One is at the end of the car sale. At the end of the car sale, we go to the second-hand car shop to buy clues and auction. At the end of the car sale, we go to the second-hand car shop to buy clues and auction. And for the used car business, you know, together with TTP, from the seller's side,

We're actually providing the lead gen services as well as the auction services so as to enable the sellers of the used car. And from the buyer's side, we're offering the lead gen services as well as some platform services so as to enable the buyers. So I think that in the future, we're also considering about launching the trade-in services and the relevant projects. So that's to better integrate our used car business as well as TTP business. Okay, let me add two points.

The first one is that in the subject matter, as Mr. Shao mentioned, the advertising budget follows the sales. Of course, as Mr. Shao mentioned, we will take more business from other products. Of course, there are also some new phenomena, such as We will also do some things to help the main plant to replenish energy. And the new energy source is actually another one. We also see that the cost of each new energy source supply for the main plant is much more than that of the oil car. I won't talk about how many times in detail. I'd like to add two points. Firstly, just like Mr. Shao mentioned,

The advertising budget of those automakers are closely linked with the auto sales. So we are also exploring the acquisition of other businesses by offering more products to our clients. And the other thing is that we will pay more attention to the operation of the users so as to enable those auto OEMs, automakers. And in terms of MEV, I should say that actually, our clients would like to pay a much higher premium for the LEED J comparing with the LEED of the traditional automakers. So I will not tell you the details about the gap between the two, but I think that this premium is very significant. So I think that through advertising as well as CPS, we will continue to empower the traditional automakers as well as those emerging premium EV brands.

Yeah, well, I also said that, you know, we offer a comprehensive suite of services to EV makers and traditional makers, automakers that make EVs through advertisement, through leads, through orders, and through, you know, TPS. So thanks, Eddie. Operator, next question, please.

Thank you, everyone. Next question is Brenda Chow from CICC. Please go ahead.

Thanks management for taking my questions. I have a follow-up question on NEV. So could management elaborate a little bit more on the cooperation model of NEV automakers and our future potential other models of this business? Thank you.

Okay, thank you, Libby. Mr. Shao, you're up. Okay, sorry.

Okay, let me answer this question. Currently, we are fully cooperating with Xilin Yuan and Xilin Yuan New Strength. It should be Xiaopeng, Weilai, Lixiang, Hezhong, Lingpao, Weima, and other mainstream Xilin Yuan companies in the market. It should be from last year, the year before, we have continued stable cooperation. This cooperation mode is mainly like this. It can be done in 12 words. The first one is called clue-based production. The second one is called clue-based analysis. In this cooperation mode, we have comprehensive CTR and CTR. So I would like to ask this question.

We have very comprehensive cooperation with the EV automakers as well as the premium EV brands. Actually, since 2019, we already entered into cooperation with the big names like Xiaopeng, like Neil, as well as Lee Auto, etc. So there's very sustainable and very stable cooperation between us. So in terms of the model of the cooperation, actually, the lead gen is actually produced based on the demand, and the price of the leads will be based on the quality of the leads. So this is the principle of our corporation model. So we offer a package of total sales increase solutions to those clients.

Thank you.

And during the upgrading of our strategy, we will also iterate the cooperation model between us and those ANV automakers. There are two main directions. The first one is that we will enhance our services, in particular the order placement services, as well as the online reservation of the test drive. And the second thing is that actually we will help those NEV automakers to expand their coverage in the different geographies, in particular in Tier 1 cities.

OK, thanks.

Operator.

Thank you, Brenda Chao. Next question is Thomas Chong from Jeffery. Please go ahead.

Good evening. Thank you, Manager Chong, for accepting my question. I would like to ask, in the current state of strategic growth, how should we look at our investment in OPEX in the future? And what is our view on headcount this year? Another question is about our overseas strategy. Will we slow down our overseas expansion? Thanks, management, for taking my questions. I have a question relating to our OPEX trend. Can management comment about our cost strategy for this year as well as our headcount plan? And my second question is about the overseas expansion strategy. Given that COVID is still quite uncertain outside China, and would our strategic upgrade actually have some changes in our overseas expansion? Thank you.

Thomas, thank you for your question. Let me answer your first question. Our chairman just mentioned in the speech that we are now doing a strategic upgrade. So it's hard to predict the specific cost and cost changes. But our usual approach is to pay attention to cost control in traditional business, and pay attention to the efficiency of operation in all aspects. In the past few years, we have always put the cost and cost saved from traditional business into the new business. Our approach will not change. As for the second question, let's ask Mr. Wang Xiao to answer the overseas business. The overseas business is like this, we are mainly two.

Okay, I would like to take the first question and Mr. Wang will take the second question. Just like our chairman said in the opening presentation, now we're planning about the upgrading of our strategies. So it's very difficult for me to give you a forecast about the changes in cost as well as the expenses. But according to our traditional legacy, actually, we're very We're very good at cost control as well as the operation efficiency enhancement. And for the cost saved in our business, we'll use them in the incubation of the new business. I think that this principle will remain unchanged.

Okay. For the overseas business, our core strategy is negative energy plus output. Negative energy is mainly the negative energy of content. This one is based on the content and service experience of a warrior. Continuous acquisition of natural users to create the content of car-watching, car-buying and car-using. The output is mainly the output of technical ability. On the one hand, we have launched online 3D and VR car exhibition products to promote the new experience of online car in the European market. Another one is to explore closed-end system services, fast applications, and renewable energy consumers. At the same time, it is based on the experience of the domestic service center. in the direction of clues and content, and cooperation on the subject. By March, this business data is steadily developing. MUV has reached 3.12 million, and 6,255 gold miners have cooperated. SKU has reached 1.2 million. 1.2 million.

So for the second question about our overseas business, we will still follow the principle of empowerment as well as output. In terms of empowerment, I mean we will actually empower our users through the content. It means that there will be very rich content provided online so as to facilitate the users to see different models online to actually have the test drive and to make the reservation online, things like that. And in terms of the output, we mean technical output, we will continue to enhance our 3G plus VR auto show capabilities so that we can launch different activities online and to provide more convenience to the online users. And from the B channel, it means that we will empower the dealers and distributors through our SaaS capabilities and platform. And in terms of our cooperation with the Auto OEM, we will empower them with our lead gen capabilities and the content creation capabilities. And you can see that in March, our total MUV is about 3.12 million. And we actually connected with $6,550. And the FPU is $1.2 million.

Just add one point to our CTO's answer. In some other markets, we don't mind looking into investment or acquisition opportunities to expedite our inroads into those local markets. And we are still confident that our overall technology content and our ability and experience to work with OEM and dealers will help us to penetrate those markets. And thank you. Next question, please.

Thank you, Thomas. Next question is Brian Kong from Citigroup. Please go ahead.

I will quickly translate by myself. So, commencement share some thoughts on you know, the deepening cooperation with P&L ahead, and what's the role P&L will play in our, you know, strategic upgrade plan in the second half of this year. Thank you.

Thank you.

I think we can classify it into three aspects. One is the technical coordination. The second is the visual coordination. The third is the scene coordination. In the technical coordination, such as in terms of AI, including in terms of automated machine learning, All gave Zhijia more capabilities. In terms of traffic coordination, we are actually promoting this project. We have introduced it to Ping'an's good car owners, Ping'an's gold managers, and Ping'an's pocket banks. Through the introduction of small programs, we are doing traffic management in Ping'an. The third one is in the scene coordination. In the scene coordination, the most important thing is that we are promoting some key projects. For example, our current data project. It helps Zhijia to provide more accurate marketing to the whole network. Because it is based on the image of the user. Thank you.

In terms of our cooperation with Ping An, I think that there are mainly three dimensions we can discuss about the cooperation. The first one is technology collaboration, and the second one, traffic collaboration, and the third one is product collaboration. And in the first one, the technology collaboration, I think that we have been greatly empowered and enabled by Ping An in terms of AI, automation technology, as well as machine learning. And the second one is the traffic collaboration. We have been cooperating with Ping An, and we have been making our presence on a lot of the mini-programs on Ping An website. For example, in their Good Car Owners, as well as the Gold Bustlers, as well as Pocket Brands, things like that. We have been cooperating with them by making our presence in those mini-programs. And in some ways, the product collaboration, these are mainly based on specific projects. say, these data projects we have been talking before. In this one, we can have more precise marketing towards the users based on the accurate user profiling. And take this August 18th campaign, for example. Ping ANSI has been greatly empowered through their communication as well as media resources capabilities.

I would like to add one more thing. Since this year, Ping'an Group has increased the link between work and mutual support for the car company. In the Ping'an series, all the subsidiaries involved in the car ecosystem are involved in the work link between the car company and the car company. Recently, we have met with some main car companies And I also like to add one point.

Actually, since this year, P&R has intensified the collaboration, cooperation, as well as support with Auto Home. Actually, for all the subsidiaries, affiliated with Ping An, which are related to the auto ecosystem, they have been totally and very comprehensively engaged with the cooperation with Auto Fall. And recently you can see that when we are actually dealing with the OEMs as well as the dealers, actually we get a lot of support from Ping An in terms of the daily work.

Thank you, Brian. Due to time constraints, 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 short time. In the meantime, please feel free to get in touch with us if you have any further questions or comments.

Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participation. You may disconnect now.