Autohome Inc.

Ladies and gentlemen, thank you for standing by for Otto Holmes' second quarter and interim 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, the 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, Sterling Song, Otto Holmes IR Director. Mr. Song, you may begin.

Thank you. Thank you, Operator. Hello, everyone, and welcome to Auto Home second quarter and interim 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.autocom.com.cn. On today's call, we have Chairman and Chief Executive Officer, Ms. Xuan Long, Co-President, Ms. Haifeng Shao, Chief Technology Officer, Ms. Xiao Wang, Vice President, Ms. You Zhou, and the Finance Director, Ms. Hong Jiang. After the prepared remarks, Ms. Long, Ms. Shao, Ms. Wang, Ms. Zhou, and Ms. Jiang 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 provisions. of the U.S. Private Security Integration 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 Security and Exchange Commission. AutoHome doesn't 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 matters. Our press release contains a reconciliation of the non-GAAP measures to the most directly comparable GAAP measure, and is available on AutoHome's IR website. As a reminder, this conference is being recorded In addition, a live and archived webcast of this earning conference call will also be available on Autohome's IR website. Now I will turn the call over to Autohome's Chairman and CEO, Ms. Long. Ms. Long, please.

Thank you, Mr. Song. Hello, everyone. Thank you for attending today's call.

Thank you, everyone. And thank you for joining us today.

In the second quarter, Our new business continues to lead the overall business development of the car industry, and the utilization level continues to increase. In the second quarter, the total revenue was 19.4 billion yuan, and the new business income achieved a 10% growth. In the same period last year, the revenue increased from 23.4% to 30.7%, mainly driven by intelligent products. The data product revenue continues to maintain a strong growth rate of 47.1% in the same ratio. Day-to-day vehicles have achieved a major milestone in the month of June through the improvement of transport efficiency. We are also expanding the cooperation with new people. In the second quarter, the revenue of new people brands increased by 238% in the same ratio.

We are pleased with the improving metrics across our new initiative in the second quarter, along with margin expansion. Total revenues for the second quarter were 1.94 billion RMB. Revenues for our online marketplace and others' business increased 10% year-over-year and contributed 30.7% to total revenues. compared with 23.4% in the same period last year. Data products maintained a strong growth momentum, generating a revenue increase of 47.1% year-over-year, thanks to the higher contribution from OEM data products. We are excited to report that with steady operating efficiency improvements, PTP broke even at the operating level for the first time in June, representing a significant milestone for us We also made further progress in our cooperation with new energy vehicle automakers. During the second quarter, revenues from NEV brands jumped 238% year-over-year. Adjusted net margin in the second quarter continued to expand, rising 2.7 percentage points year-over-year to 40.8%.

In the second quarter, the global chip shortage has gradually increased the impact on the new car and used car market. In May, the sales of used cars fell separately by 2.7% and 1.7%. In June, the sales of used cars continued to show a clear return after May. The same ratio fell separately by 13.7% and 11.1%. In addition, the price of raw materials has increased significantly and has further increased the cost-effectiveness of cars. As the impact of global chip shortage on the new passenger vehicle sales market gradually deepens in the second quarter,

the production and sales of new PVs in May decreased by 2.7% and 1.7% year-over-year, respectively. This trend continued in June, with production and sales declining by 13.7% and 11.1% year-over-year, respectively. In addition, automakers were further impacted by the sharp rising costs of raw materials. As automakers contend with multiple unfavorable conditions, They are adopting an even more cautious approach to plan marketing budgets, and our traditional business is facing great challenges. On the other hand, China's auto market has continued evolving with mixed performance across different segments. The market has witnessed expanding trading volume for used cars and new energy vehicles are moving into the fast lane, highlighted by a secular growth trend in monthly sales. As a result, the automobile industry split widened.

面对行业变化的危遇期, 汽车之家一方面持续改善11代用户体验, 对B单客户实施分层经营提高高价格的服务, 保持稳定的传统业务基盘和行业领先地位。 另一方面,通过大力发展包括数据产品新能源和二手车在内的新业务,

In the wake of challenges and opportunities stemming from these industry changes, we continue to improve our C-end user experience while implementing hierarchical management for B-end customers to provide high-value services. All these moves underpin our efforts to maintain a solid fundamental across traditional business with industry-leading positions. Meanwhile, by vigorously developing new initiatives across data products, new energy, and used car business, we are creating our second curve of growth to promote the long-term sustainable development of our company.

and maintain rapid growth. According to QAM statistics, in June, the number of mobile units and active users increased to 44.1 million, which increased by 16%, further consolidating the leadership position of the industry. In addition, Car Home continues to optimize the user experience by upgrading the application, upgrading to young and video-oriented direction, and continuing to increase the coverage of live broadcast content and news content.

Specifically, our constant efforts in content enrichment are propelling our progress, and we are pleased to see our traffic continues to lead the auto media vertical, surpassing total traffic volume of second and third players while maintaining a rapid year-over-year growth. According to statistics from Quest Mobile in June, the number of average DAU who accessed our mobile website, primary app, and mini apps grew to 44.1 million, representing a 16% year-over-year increase. In addition, with the upgrade of our app, we further optimized user experience, featuring more video forms, live streaming, and interest-based content offerings. The latest version is poised to attract a younger demographic.

Car manufacturers continue to maintain the market share leading in the automotive media industry, focusing on leading customers in the industry, providing customized solutions for different types of car needs, and improving service quality. At the same time, we actively expand non-advertising business channels, such as providing user-operated services to make the main factory realize user-oriented, form user assets,

With regards to our traditional business, we believe we remain as a leader in terms of market share in the auto media vertical and continue to focus on key customers, prioritizing customer-side solutions to meet their needs. while enhancing our service quality. We are also proactively expanding our service to the non-advertising business. For example, we help automakers with user operations, offering OEM direct access to their users and aggregates their own user assets. On the leads generation front, we continue to strengthen our positions By providing dealers a set of operating tools such as live streaming and instant messaging to help improve their operation and conversion efficiency.

Amid a fast-developing NEV market, we established a dedicated new energy business department to explore market opportunities.

Through business model innovation, we are finding solutions to address industry pain points in branding, distribution channel, and user operations, helping NEV automakers see emerging and growing opportunities. In the first half of this year, we cooperated with 20 NEV brands, resulting in a 238% year-over-year jump in revenues from NEV brands across our platform during the second quarter. far exceeding the growth rate of the EV industry.

二手车方面,2021年是汽车之家与天天拍车 发生化学反应的一年。 通过收购天天拍车, 汽车之家二手车业务形成了 C2B2C全业务闭环, 提升全方位服务行业的能力。 通过汽车之家的赋能和精细化管理, 天天拍车得以提升运营和交易效率, We believe 2021 is going to be a crucial year.

for Auto Home and TTP as we are committed to deepening our cooperation for further success. With the acquisition of TTP, Auto Home's used car business has formed a C2B2C end-to-end business covering the full used car lifecycle from selling to purchasing a used car, which enhances our ability to serve users and customers. And TTP, supported by Auto Home, has improved its operation and transaction efficiency. In June, TTP broke even at the operating level for the first time, a significant milestone for us that demonstrates great synergy between auto homes and TTP. We are also looking for other opportunities that could lead to synergistic development and expansion of our auto ecosystem.

In terms of data products, we insist on using customer demand as a guide Moving on to our data product.

Our consistent efforts in product optimization and effectiveness improvement have been gaining momentum among customers. In the second quarter, a total of 19 automakers utilized our data products, and the total number of programs for intelligent new car launch and intelligent marketing solutions was more than 30. As for data products for dealers, we remain focused on product upgrades and enhance product value, offering a full spectrum of services from user acquisition, transaction to maintenance.

We will also support the development of these key areas. On September 15, we plan to share our strategic upgrade plan with the investors on the opening day to better secure market opportunities.

In conclusion, we are fully committed to maintaining our leading position in terms of traffic and market share in the auto media vertical while exploring fresh pathways in new business areas. We have achieved meaningful progress in data, used car, and EV businesses, and our strong balance sheet and profitability allow us to make investments in these key areas. We plan to announce our strategic upgrade plans in detail at the upcoming Investor Day on September 15th to see small market shares, opportunities and ensure our long-term growth.

China is the world's largest new car consumer market and the largest new energy car consumer market. China's second-hand car market is also one of the world's fastest growing major markets. Despite this, compared to developed countries, China's level of car maintenance and second-hand car and new car sales can have a huge potential for improvement. We believe that the current difficulties of the car industry are temporary. The long-term growth trend of the car industry is unchanged. Looking forward to the future, we will follow the upgrade of the strategy, and use the technology of the home of cars and Ping'an in resources, traffic, and technology. 我们有信心汽车之家将会打开新的增长空间,实现自我超越,为用户和客户带来更多价值。 China is the world's largest new car market and the largest NEV market.

China's used car market is also one of the fastest growing major markets in the world. However, in contrast to developed countries, China's car ownership per thousand people and the use to new car sales ratio still have huge growth potential. Going forward, we believe the auto industry will gradually recover from the temporary difficulties we are facing at the moment, and the long-term growth trend remains unchanged. Looking ahead, with our strategy upgrade and our cooperation with Ping An in terms of internal resources, traffic, and technology, will unleash room for further growth, go beyond ourselves, and bring more value to users and customers. With that, I will now turn the call over to our finance director, Ms. Hong Jiang, for a closer look at our second quarter financial results.

Thank you, Mr. Long. Now let me walk you through the key financials for the second quarter. Please note that, as with prior calls, I will reference RMB only in my discussion today unless otherwise stated. Net revenues for the second quarter were $1.94 billion. For a detailed breakdown, media service revenues came in at $600 million. Least generation service revenues were $744 million. and the online marketplace and others revenue increased by 10% year-over-year to $594 million, primarily driven by the consolidation of TTP and the increased contribution from data products. Moving on to cost, cost of revenues was $262 million compared to $265 million in the second quarter of 2020. Gross margin was 86.5% in the second quarter compared to 88.5% in the same period last year. Turning to operating expenses, sales and marketing expenses in the second quarter were $562 million compared to $872 million a year ago. The decrease was primarily due to a decrease in promotional spending. Product and development expenses were $335 million compared to $326 million in the second quarter of 2020. Finally, G&A expenses were $177 million compared to $82 million in the Q2 2020. The increase was primarily attributable to the consolidation of TTP and the beta provision related to a certain advertising customer. Overall, we delivered operating profit of $673 million for the second quarter, compared 71 million in the corresponding period of 2020. Adjusted net income attributable to Auto Home Inc. was 790 million for the second quarter, compared to 881 million in the corresponding period of 2020. Non-GAAP basically diluted earnings per share for the second quarter were 1.57 and 1.56 RMB, respectively, compared to 1.85 and 1.84 RMB in the corresponding period of 2020. Non-GAAP basic and diluted earning per ADS for the second quarter was 6.27 and 6.26 RMB, respectively, compared to 7.39 and 7.36 RMB in the corresponding period of 2020. As of June 30, 2021, our balance sheet remained very strong with cash, cash equivalents, and short-term investments of $18.43 billion. We generated the operating cash flow of $581 million in the second quarter of 2021. With that, we are ready to take your questions. Operator, please open the line for Q&A.

We will now begin the question and answer session. All the participants with questions to pose, please press 01 on the telephone keypad and you'll be placed in the queue. To cancel the queue, please press 02. Thomas, please go ahead.

Hello, Thomas. Operator, there is no one to ask.

Sorry, can you hear?

Next we have Richie. Hi, Thomas.

I'm sorry about that. The connection had some problems. The question is about the auto industry outlook. Can management share about the trend going forward? Thank you.

We will ask Chairman and CEO, Mr. Long, to answer a question.

In terms of the overall test situation for the first half of this year, I believe everyone already has a basic concept. The first quarter is very good. Then from the second quarter, it is an extreme downfall. So for now, according to our communication with the industry, the chip shortage problem and the rise in raw materials, Taiwan Taiwan Taiwan Well, thank you for the question. Actually, if you look at the first half of the year, and then we make some judgments over the future outlook,

First of all, Q1, the data was really good in the auto market. Q2, we do see the data drop sharply, and after we communicated with the industry experts, we found out that the lack of enough supply of chips, as well as the raw material increasing of the cost, does impact the auto market. I don't think this situation will be you know, eradicated in a short period of time. Maybe in Q4, the condition may be more eased. So we believe that for the whole year, in terms of the auto sales, we would experience positive growth. However, the positive growth would be quite not so robust. It may be single-digit growth, so definitely it will be less than 10%.

Okay, thank you for Ms. Long's answer. Operator, we can go ahead.

Next, we have Richie from HSBC. Your question, please.

Let me translate this myself. So I have two questions. So first one is, can management comment how will this regulatory environment affect the competitive landscape going forward? And what are the costs and opportunities that we foresee from this new environment? And second question is, what is the outlook for used car industry, and how is the competitive landscape, and what are the areas that we can still improve on, and do we see any M&A opportunities in this space? Thank you.

Thank you for your question. Here we have our president, Mr. Shao, to answer your question. Mr. Shao, please.

Okay, let me answer the question about 20 cars. Thank you. I would like to take your second question, which is about the used car business. Just as Mr. Long has said, we believe that

the room for the used car market is very promising.

Actually, there are three features of the used car business in China as a status quo. The first characteristic is it is

more or less a chaos market and a segmented market. Secondly, the market lack of enough trust and transparency. And thirdly, we lack of enough financial support.

If you look at it from the other side, C2B and B2B actually have the space for profit. But B2C will actually go to the edge of profit, and then it will go bankrupt.

So we believe that the business model, which is C to B and B to B, they both have potential to be profitable. However, for the B to C business, it may suffer loss sometimes. So it may be on the edge of the profitability.

For Zhijia Eryang, when we look at our strategy for entering the second-hand car market, So for other homes, we do have a few strategies used to call business.

The first one is life asset model. We would stick to life assets.

And secondly, we do have the long-term strategy on this market. As you know, the whole used-to-come market in China is developing very fast, and there are a lot of changes in this market.

We have to be persistent, and we have to carry on until the tipping point occurs in this market. And in that time, we should be prepared in terms of we have enough capital, we have enough capacity, and we have good experience and good branding. So in this way, we would get prepared for this market to further grow.

Finally, I would like to add that in this 25 car, for example, this TiantianPai, China China China China China China China China China

And lastly, I want to comment on TTP. We already have chemistry with TTP. As you know, we have a lot of resources, and also we embedded the Internet technology and the know-how with TTP. And together with Ping An, we empowered TTP. So actually, in this room, there is something historical happened, which is we achieved break even in this June. So this is a very successful experience, which we believe we can copy that to some other areas. For example, new business investment opportunities are there.

OK. That is all for your question. Operator, we can go ahead.

Thank you. Next, we have Eddie from Morgan Stanley. Your question, please.

Thank you, Mr. Long and Mr. Sterling. Can you hear me?

Yes, we can. Please go ahead.

Okay. Thank you, Mr. Long and Mr. Sterling. Thank you, Mr. Sterling. Thank you, Mr. Sterling. Thank you, Mr. Sterling. Thank you, Mr. Sterling. Thank you, Mr. Sterling. Thank you, Mr. Sterling. The first level is that, like us, this vertical platform, in the pattern of the competition in the first half of the year, I would like to ask Mr. Long to help me analyze what it looks like. The second is about the vertical and other new channels. This is a competitive relationship. Have you seen that the new channels are taking some vertical shares? This may want to ask the management to help us analyze this first problem. Then the second question is that the Internet industry, in fact, has recently included platforms like Alibaba, and they have not been approved in terms of tax rates, such as some key software companies. I would like to ask if we will have such a situation. I have two questions. First is about the competition. So the first level of the question is that, can you comment on the competitive landscape within the auto vertical between us versus the other vertical players in the first half of this year? And the second level of this question is that can you comment or give us some color about how the dynamic between the auto vertical versus other new channels in terms of their getting budget from these OEM and dealers. The second question is about the tax. So as we noted that some of the, you know, platform, internet platform company, they are not get approved in terms of the lower tax rate to 10% of the key software, you know, the company tax rate. Just wonder if we have any, this kind of, you know, the problem as well. Yeah, thank you.

Okay, I will answer this question. First, I will answer your question about the relationship between competitors. The second question is about the current issues on the national policy level. I will answer the first question. For the second question, I will ask our CTO, Wang Xiao, to answer it. Oh, tax, right? I'll start with the first question, which is about competition. One thing I want to say is that any industry has competition. As a car manufacturer, we welcome competitors in this industry. Because of the presence of competitors, we can actually accelerate the corresponding development in this industry. We can also make the competitors Thank you very much. I would like to take your first question which is about competition.

As you know, for any industry, it always has competition. We welcome our competitors because we believe competition would boost the whole industry to further develop, and this would be a good opportunity for us to learn from each other. And if we actually boost the collaboration and the competition, we believe that we would push forward our technical know-how and we can build a more high-end level for this whole market.

The second point I would like to make is, as I have already mentioned in my previous announcement, our car industry is the number one in the car industry. At the same time, we are the second and third in the car industry. This is one of the reasons. Secondly, we have more than 50% of our family's market share. As a car company, I think we are a listed company. So we can't do it according to our own words. You can also take a look at what I just said. The third party, QM, has some relevant data statistics. Well, as you know, I have just issued my report which has said our constant efforts in content enrichment are propelling our progress.

and we are pleased to see our traffic continues to lead the whole auto media vertical, surpassing the total traffic volume of the second and the third players while maintaining the rapid year-over-year growth. In this way, our DAU numbers also reach to a historical high, which is 44.1 million. In this way, We actually achieved great success in getting a lot of traffic, and we are definitely in a leading position.

I would like to talk about the third point. As a competitive industry, we are a listed company. So we are highly aware of some of the policies related to this kind of supervision. So according to some of the supervision policies in the first half of this year, some of these more and more strict requirements, in fact, as a car company, we actually have no problems in the middle of this. At the same time, we have not received any information about data security in terms of supervision. or some related notifications or warnings related to the supervision of the central government. In other words, in these aspects, we are all in line with the political requirements of our country, not only in terms of user information security, personal privacy, and so on. Now, talking about the regulation, as you know, Auto Home is a listed company, and we are fully compliant with the regulations and the laws and policies. As you know, for the first half of the year, we did

the regulation and compliance gets tightened. However, in terms of data security as well as the personal privacy protection, we have never received any notice or any warning from the regulators in China, which means we are fully compatible with the laws and the regulations in terms of data protection, security protection, and the privacy protection. We're not only being fully confined with the laws and regulations, we also take one step ahead, which is the regulation plus one, which means we are even in a tighter position in terms of being fully confined with the laws and regulations.

Let me answer the tax rate question. We also pay attention to the fact that the state policy of applying for the most important software companies is a tight, comprehensive policy. Now I want to answer your second question, which is about the tax policies.

As you know, the regulation has been tightened for the key software corporations to receive the favorable tax policies. Actually, for order home, we are fully compatible with laws and regulations, and we are eligible for applying for such favorable tax policies. We would continuously keep a close eye on this policy, and we would understand the policy in full rise. and we would continue to apply for the favorable tax policies.

Operator, we can go ahead.

Thank you. Next, we have Brian from Citigroup. Your question, please. Hi, Brian. Please go ahead.

Hi, management. Hey, management. Can you hear me?

Yes, we can hear you.

Please speak. Yes, thank you, management. I might have missed something just now. I don't know. There are two questions. The first question is, I don't know if anyone has asked, but I want to ask, how does the management view the car market and advertising budget in the second half of the year? The second one is, OK, thank you. Let's have Mr. Shao answer your question. Next, we will ask Mr. Shao to answer a question. OK, this question is for Mr. Shao.

Of course, there are two problems. The first is the budget of the vehicle factory in the second half of the year. As Mr. Long just said, the second half of the year should look like this. Q3 will actually continue to maintain a short circuit because of the chip short circuit. This is called the production capacity of the main machine factory. The production capacity cannot be mentioned. Then Q4 should be the problem of chip shortcomings will be resolved. Then the production capacity of the main machine factory will be resolved. These two things actually lead to the budget of the main machine factory in the second half of the year. It should look like this. Its budget is most important, I think, is to follow the sales. The second is to follow the annual profit target of the main machine factory. Now, thank you for the question. In terms of the automaker's budget of advertising, we believe that in Q3, the shortage of the supply of chips still affected

the capacity of the automakers. And also, it affected the sales. And in Q4, we believe the situation would be more eased. However, for the next half of the year, we can see the automaker's advertising budget always go with its sales volume, and it also goes with their annual target. So if the sales volume is underprivileged, And the profit target is under pressure. We believe their advertising budget would be under double pressure.

Now, the second question is about the dealers' numbers. Actually, we have some statistics till the end of June. We call them the auto dealers, which is already on the Internet, actually on our network.

Actually, last year, this number was 23,800. And that was last year. This year, this end of June, the number is 25,600. So slightly up. My last comment on this question is the coverage rate. The penetration rate or coverage rate for auto homes for the auto dealers was very good. So in this way, especially the paying members, we have a flat paying members for the dealers as over last year.

Thank you for your question. We can go ahead.

Thank you. Next, we have Liu from DP. Your question, please.

谢谢管理员接受我的提问。 我有两个问题。 第一个问题想要问一下, 我们看到销售费用在2Q的时候下降了不少, 但同时我们看到我们的竞争对手 其实还是很积极地在获客。 So I'll translate mine itself. So the first question is, We see that sales and marketing spend in second quarter declined quite a few. So while our competitors still acquire users aggressively. So I want to ask, what is our user growth strategy in the future? My second question is regarding data products. So we see our data products still grow robustly. And what is the outlook for second half and what is the new product in the pipeline. Thank you.

Okay, thank you for your question. We have Vice President Zhou You answer your question first, and then our President, Mr. Shao, will answer your question. Ms. Zhou, please.

Okay. First of all, thank you for your question. Actually, you asked a lot of questions. Maybe I should explain them. First of all, you asked about the decline in our sales costs, right? And then it led to, maybe, including Versus, our competitors, what are their strategies in terms of goods and what are our strategies in terms of goods? The second question is, what are our data products going to be like in the second half of the year? I will answer your question in this way. The first question is, just like what Longdong just introduced, our entire C-end user end and our B-end customer end actually hold a very strong position in the market. I would like to help Mr. Long to add some questions about the user interface. Especially, Mr. Long said that the data of the mobile app in Quest Mobile has already exceeded the second and third place. In addition, we usually do not count the data of our traditional PC interface on the Internet. If we add the PC interface, the advantage of our user traffic is greater than that of our so-called competitors. So this is the first aspect.

Thank you. Let me decompose your question. The first one is about the sales expenditure declining in Q2 versus our competitors. They are spending more in acquiring new customers. So actually, if you look at our customer and the traffic strategy, on the 2C and the 2B side, we are number one in terms of the market share and also the traffic. According to Quest Mobile, On the mobile side, our traffic is more than the total sum of number two and the number three players. If we add up the PC side traffic, we definitely can see even more actually growth of traffic advantages. So we are in the leading position in terms of the traffic and the market share in the vertical media industry.

In the future, there are several main aspects of future user growth. The first aspect is the downfall of the market. According to our internal statistics, in the past second quarter, our new users mainly came from cities below the third line, which is about 70%. This data was about 50% in the same period last year.

In the future, how can we expand our user base? We did have a few strategies. Firstly, is go more granular level. We call think sound into lower tier cities. If you look at the incremental new members, actually we used to have 50% from the tier three cities. Now this number has gone to 70%.

Second is, we are attracting more younger users. For example, the age at or below 35 years old, they are accounting for a high portion out of total users. In fact, our sales cost is also a process of dynamic adjustment. We will, according to the situation of the market, the situation of competitors, and the situation of customers and users, make very exciting adjustments. In the future, we have actually released the new APP version of 11.0. At the same time, we will develop in the direction of younger, more video-oriented, and more diversified people. Increase the content coverage of live broadcasts and interests, and acquire new users with more gameplay and more scenes.

In the future, we actually want to say our sales expenditure are always dynamically changing. We would be readjusting dynamically based on the status quo of the customers, competitors, and the market. We launched the 11.0 new version, which would be more video-based, more younger generation targeted, and more diversified. We would try a lot of new efforts, for example, live streaming videos, as well as a lot of new scenarios.

This is the answer to your first question.

The second question is for Mr. Shao. In terms of data and data products, I will answer your question. First of all, I am very happy to see that we are adding a new industry of data products with high-speed growth. In terms of Q2, the income of the data products is the same as that of the lightning, which is 47%.

Now, Mr. Xiao is going to address your second question, which is about the data product. We are very glad that you have noticed that we do achieve good growth on our new data product business. In Q2, the growth is about 47%.

Our long-term strategy for the data product is we will further enhance the total weight of the data product in our total revenue

And leveraging on the high growth of the data product, we are going to achieve a higher growth on our revenue.

We have two ways to achieve this goal. The first is to warmly invite you to attend our new release on September 15. I think at that release, we will do a more detailed release on our data products, future strategies, and goals.

So to better understand our scenario, we would only invite you to attend our September 15th New Strategy Conference. On this New Strategy Releasing Conference, we are going to elaborate on the data product strategy and target.

Actually, we also had a lot of new moves.

From the beginning of the year to today, we always have been upgraded our data product and optimized our data product. For example, this year, for the dealer's data product, we launched 11 modules. And in June, in September, we are going to release the new version, which is the 2.0 version of the intelligent new car launch modules.

That is all the answers. Operator, let's move on to the next question.

We will now be taking one last question from Ashley from Credit Suisse. Your question, please.

Thank you for accepting my question. I mainly want to understand the background of the Lan Tian Project that we launched in April and the current impact on the business or the feedback from the retailers. I just want to check about our initiative starting this April that we require users to verify through message when they leave their contacts. So just want to check the background and impact from this initiative. And if we look forward, how would this impact the pricing in our next negotiation round with the dealers? Thank you.

Thank you, Ashley. Our president, Shao, will answer a question.

The Blue Sky Project was launched in mid-April. The main reason we launched it was because we wanted to become a model for the industry. We wanted to be the first to implement the law on women's protection.

Thank you very much for your question. Actually, ever since April, we launched the Blue Sky Plan, which we want to be a role model in the industry to implementing the information protection law and data protection law of China.

The second thing we want to do is to make sure that our data can continue to remain in the industry. We are the highest quality data.

And secondly, in terms of the quality of the leaves we generated, we claim to be the best in the industry, and we are proud to say we are the best.

Based on these two reasons, we first promoted the Lan Tian Project. The Lan Tian Project should be like this. After we implement it, it should be called... For us, in April, our clue is the same as...

Actually, after implementing this April's Blue Sky Plan, if you look at the number of the leaves, it dropped by 10%.

Actually, if you look at the lead quality, the lead quality has improved. And followed by our initiative, in June, some of our peers

They have gradually introduced similar plans carrying different names.

We have gradually introduced similar plans carrying different names.

And then we shift our focus into optimizing of the product and try to enhance the user experience. And until August, we do see that our lead generation numbers have already recovered to the period of time before we carry out the Blue Sky Plan. 所以我想蓝天计划应该不会成为是我们车商会续约的一个障碍。

So what I want to say is the blue sky fire would never be a barrier

for our dealers and automakers to continue to renew their contract with us. On contrary, it would lay a solid foundation for them to recognize we are the market leaders and the quality of our leads have been greatly improved. So in this way, this plan is quite positive.

That's all for the answers, operator. Time runs out, so let's move on to the last part. Thank you.

Due to time constraint, this will be the last question we take on this call. I will now turn the conference back to the management for closing comments.

Thank you. Thank you everyone for joining us today. We appreciate your support and we look forward to updating you on our next quarters.

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. Thank you, everyone. Bye-bye.

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