Autohome Inc.

Ladies and gentlemen, thank you for standing by for Autohome's first quarter 2023 earnings conference call. At this time, all participants are in the 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, Sterling Song, Autohome's IR Director.

let's sit down please go ahead thank you operator good evening everyone i'm starting soon welcome to autohome first quarter 2023 earnings conference call earlier today autohome distributed its earnings treasury and you may find a copy on the company's website at www.autohome.com onto this call we have chairman and Chief Executive Officer, Ms. Xuan Long, and the Chief Financial Officer, Ms. Chris Janssen. After the prepared remarks, our management team will be available to answer your questions. Before we continue, please know that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Integration Reform Act of 1995. Forward-looking statements are subject to risk 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 U.S. Security and Exchange Commission and the Stock Exchange of Hong Kong Limited. Older Home doesn't undertake any obligation to update any forward-looking statements except as required under applicable law. Please also know that AutoHomes earnings press release and this conference call includes discussions of certain unaudited non-GAAP financial measures. Please refer to our press release, which 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 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 CEO, Mr. Long, for opening remarks. Please go ahead, Mr. Long. Thank you, Mr. Long.

Hello, everyone. I am the Chairman and CEO of Autohome's IR website, Mr. Long. Thank you for attending our call today.

Thank you, Sterling. Hello, everyone. This is Quan Long, Chairman and CEO of Autohome. Thank you for joining our earnings conference call today.

The revenue from daily filming and data products has returned to the growth track. The revenue contribution from new energy brands continues to increase, and the market is growing rapidly. As the business is solidly selling, the profitability of the family of cars continues to improve. Those belonging to the family of cars in the first quarter have adjusted their net profit by 10.5% and have adjusted their net profit rate to 31.5%.

We got off to a solid start in the first quarter with total revenue increasing by 4% year-over-year despite a challenging auto market. We see a series of robust revenue growth of 35.5% year-over-year. Notably, revenues from TTP and data products returned to their growth track, and the revenue contribution from new energy brands continued to rise, with the growth rate once again outperforming the market. We not only made solid progress in our businesses, we also improved our profitability. Adjusted net income attributable to auto home for the first quarter was up by 10.5% year-over-year, and our adjusted net margin remained at a competitively high level of 31.5%.

In the first year of 2023, Qishijia launched a series of measures to accelerate the systematization of customer service and customer service. In the user unit, we released a large-scale strategy to make car life better by focusing on car consumption, extend to all aspects of car life, and drive the overall content of the ecosystem, like car life. The new sales model of the customer unit, the car's energy space station, has been fully implemented, and has been officially launched. According to the plan, it is in the expansion period. In terms of technological innovation, we have not only achieved new developments, but also expanded the application scene of digital products. It also brings new data products driven by AI technology for retailers. These improvements have broadened our business field, providing more comprehensive services to users and customers, and helping us maintain competitive advantage. In addition, we have also contributed to Baidu Wenxin Yiyan, becoming the first car consulting industry ecological cooperation partner. In the future, the two sides will explore together and launch the application landing of the large language model.

We began the year by rolling out a series of initiatives to broaden the reach of our dual ecosystem, comprised of user service and customer service. On the user side, we launched our CN user-centric, creator-oriented, and making car life better strategy to enrich our platform services, expanding from our previous focus on car consumption to capture all aspects of car's lifespan. This shift is transforming our platforms overall content to address a wider range of automobile consumers' needs. On the customer side, we fully implemented our new auto home energy space retail model and initiated franchise stores to quickly replicate the service model according to plan. We've also made drives in product and technology creation, augmenting the application scenarios for our digital products and the new AI-powered data products for dealers. These advancements have broadened our business horizons with more comprehensive services offerings that help us maintain our competitive edge. Moreover, we also connected to Baidu's early vote, becoming its first ecosystem partner in the automotive information industry. Going forward, Autohome and Baidu will jointly explore and prepare the application of large language models.

Looking forward to 2023, the automotive market will continue to present a stable and positive development style. New energy automotive penetration rate continues to increase. Automotive consumption needs and vitality are to be released further. Government departments are stable and support automotive general

Looking into 2023, we are seeing positive trends in the automobile market and expect it to maintain a steady upward trajectory. The penetration rate of new energy vehicles will continue to rise and greater consumer demand will be released. We also look forward to additional supportive government policies which will help further stabilize the auto market and encourage auto consumption. Meanwhile, we will strive to create a healthier and more vibrant ecosystem, serving our continuously expanding user groups and increasing our influence among car buyers and users. We remain committed to our open and inclusive development concept, leveraging our core business and technological innovation to reduce decision-making and transaction costs for our partners, and achieving long-term, high-quality development in this ever-changing environment. Now with that, I will now turn the call over to our Chief Financial Officer, Greg Stone, for a closer look at our first quarter operating, and financial results. Thank you, Mr. Long. Hello, everyone. I'm the Chief Financial Officer of Automobile. Thank you, Mr. Long. Hello, everyone. I'm President, the CFO of Autohome. In the first quarter, Automobile's large-scale ecological strategy continues to fall. On the one hand, we continue to work hard on content innovation and product experience, trying to provide user-satisfied high-quality services On the other hand, we focus on the creator ecosystem, from content, motivation, tools, and services to the four major dimensions. We encourage creative creators to encourage high-quality content creation, and through the creation of new media and small program alliances, to form a diverse content array with unique characteristics, and to achieve user traffic and multi-channel growth. During the first quarter, we continue to implement our sea and ecosystem strategies. On one hand, We strive to advance content innovation and enhance product experience to provide users with exceptional services. On the other hand, we focus on our content creator ecosystem, empowering creators across the areas of content, incentives, tools, and services to holistically encourage high-quality content creation. We've also formed a diversified content matrix that drives multi-channel user growth. through new media and small program alliances. For example, in the beginning of the year, a series of infrastructure measures released by the Car Home Creators Conference effectively promoted the significant increase in the number of new users and the quality content of the new home platform and the new day. In the field of content, the original content of our first quarter was created by China, and it will be combined with cross-border multi-faceted content. The total number of broadcasts is more than 130 million, and the number of interactions is more than 840 million. In addition, at the Shanghai Motor Show, we bring immersive shopping experience to users through AR, full-body driving, and other technologies. The number of platform content releases exceeds 240,000, and the total exposure reaches 4.8 billion. The data of Quest Mobile shows that the volume of car owners has expanded rapidly in the beginning of the year. In March, the number of daily users on the mobile platform increased by 42%, reaching 64.15 million, creating a new high in history, and continuing to attract car media. For example, at the beginning of the year, we introduced a series of incentives at the Auto Home Creators Conference, resulting in a significant increase in the number of new authors and the daily amount of new high-quality content posted on our platform. On the content front, we launched Made in China in the first quarter, an original IP combining auto evaluation with cross-border elements. It attracted a massive audience, generating more than 130 million views and over 840,000 interactions across the entire network. In addition, for the Shanghai Auto Show, we utilized AR and holographic car viewing technology to provide users with an immersive experience. The Auto Show generated over 24,000 pieces of content, resulting in a total exposure of over 4.8 billion. According to Quest Mobile, Autohome's traffic scale has expanded rapidly since the beginning of the year. In March, our mobile DAUs increased by 42% year-over-year to reach a record high of 64.15 million, demonstrating our continued leadership in the automotive media vertical. Traditional business management, car dealership, traditional business. Our lead subscription package provides customers with a comprehensive range of products, ranging from direct connection with users to intelligent empowerment of daily operations and competitive landscape insights. By leveraging our advantages in traffic and data technology, we are able to support our dealer customers' optimization and transformation with respect to user operations, expansion of profit points, operating decisions, and more. As we enhance our core business, We use our deep understanding of the industry to identify trends that support our ability to explore new opportunities, create innovative models, and expand our business to address potential growth avenues. In the energy sector, since the first offline experience store in Shanghai was launched, we have been continuously optimizing and adjusting the process of e-sports, enriching the user experience, shortening the user decision period, The effectiveness of multi-brand services has been effectively verified. The number of partners and customers is also constantly expanding. Currently, more than 30 brands have reached cooperation. On the basis of the success of the model, our new joint store has started construction. The scale of new sales business will be further expanded in the year. In the first quarter of 2003, the sales scale of new energy brands continued to increase, with the same increase of 67% and a large increase in sales in the industry. For our new energy business, we have been continuously optimizing and adjusting the operations process as our first offline experience store in Shanghai since its launch last September, enriching user test driving scenarios and shortening user decision-making cycles, among other refines. Our increasing number of cooperative customers clearly demonstrate the efficiency of our multi-brand services model. We've already reached cooperation with more than 30 brands and have started the construction of franchise stores aiming to further expand the scale of our new retail services this year. In the first quarter, the revenue contribution from new energy vehicle brands continues to rise with a year-over-year increase of 67%, significantly outperforming the growth rate of broader industry sales. In addition to the continuous upgrade of the existing data products, in the first quarter, we launched EV smart cloud to break through the blind spot of new energy vehicles and provide new energy vehicles with integrated data solution solutions for manufacturers. The value of the product has been further extended. In terms of commercial data products, in the first quarter, the core indicators of commercial data products all show a rapid growth trend. The number of paid merchants, the number of electric army cooperation products, and the number of electric army income are both increasing. Moving on to digital products. In addition to continuously upgrading our existing data products, in the first quarter, we launched our EV Smart Cloud, a new product designed to address blind spots in new energy vehicle data and provide manufacturers with integrated data solutions. This product will greatly enhance our digital offerings value. As for data products, for data customers, we embraced and integrated new technologies to launch smart selection, AI-driven tools, which help dealers quickly identify high-net-worth users, effectively enabling dealers to release more production capacity and improve service quality. During the first quarter, we experienced a rapid upward trend in all of our key indicators for our data products for dealers. The number of dealer customers for data products, the average revenue of data products for dealer stores, and the average number of data products adopted by each dealer store all grew by double digits compared to the prior year period. We are now entering the era of active intelligence operation, where model decision-making and human collaboration come together to create a powerful and efficient system. In the second-hand car industry, even though the price of new cars in the first quarter has plummeted, it has brought some pressure to the second-hand car industry. However, with the addition of second-hand cars and the combination of day-to-day parking, the total revenue of people has achieved rapid growth and reflected the high efficiency of the business. The second-hand car industry has also continued to maintain a good business. In general, the information collection and auction service through the home platform has affected the second-hand car trading volume of about 21.8% nationwide, which has increased by nearly 2%. In terms of products, we have upgraded the second-hand car to be a comprehensive tool for car mining. including maintenance, collision, and new energy battery situation. In order to create a transparent and affordable second-hand car consumption environment for both buyers and sellers, we will continue to build a full chain of second-hand car trading platforms for both buyers and sellers, and maintain a leading position in the industry. Regarding the used car business, fluctuating new car prices in the first quarter put some pressure on the used car industry. However, Auto Home's used car business unit, together with TTP, new achieved buy-on-buy growth, demonstrating the synergy between our businesses. Our used car business as a whole also maintains profitability. In the first quarter, through Auto Home's matching and auction services, our platform accounted for about 21.8% of all used car transactions in China, representing worldwide growth of nearly 2%. In terms of products, we've taken our comprehensive vehicle condition inquiry tool for used cars to the next level. The tool supports queries including general car repairs and maintenance. collision repairs and new energy battery conditions, providing sellers and buyers with a transparent and reliable consumption environment. Going forward, we will remain at the forefront of the used car industry, creating a one-stop, full-service platform for used car users and dealers, supported by our SaaS products. From this point of view, the change in the demand of car manufacturers is closely related to the upstream market and the demand of users. It continues to break through the boundaries of business and is committed to providing users with more diverse content, tools and services in addition to information. As the pioneer of industry development, we insist on the concept of technology innovation to accelerate the stage upgrade of core technology, and continue to bring new technologies, new products and new models to lead industry development. In the future, we will continue to Over all, Auto Home is staying ahead of the curve by tracking the ever-evolving market and the user need. we consist consistently push the limits of quality service providing users with more comprehensive and diversified content tools and services in addition to auto information as an industry pioneer we are committed to the concept of development through scientific and technological innovation as such we are rapidly advancing our core technologies and introducing new models to lead industry development looking ahead We will continue to devote ourselves to empowering the industry with cutting-edge technology, amplifying our competitive advantages, opening up new business areas, and achieving long-term, high-quality development. Next, let me walk you through the key financials for the first quarter of 2023. Please know that, as with prior course, I will reference RMB only in my discussion today, unless otherwise stated. Next revenues for the first quarter were 1.53 billion, up 4.2% year-over-year. For a detailed breakdown, media services revenue came in at $361 million and increased of 53% to 35.5% year-over-year. Least generation services revenue was $681 million, and online marketplace and other revenues were $492 million. In terms of cost, the first quarter's operating cost was $3.4 billion, and the previous year's operating cost was $2.55 billion. Moving on to cost, cost of revenues in the first quarter was 340 million compared to 255 million in Q1 2022. The increase was primarily attributable to the growth of operational cost. Growth margin in the first quarter was 77.8%. compared to 82.7% in Q1 2022. In terms of business expenses, the first quarter sales and market expenses are 5.23 billion yuan, and the same period of the previous year was 5.92 billion yuan. Comparison is mainly due to the decline in market promotion expenses. Development expenses are 3.24 billion yuan, and the same period of the previous year was 3.55 billion yuan. Finally, general management expenses are 1.49 billion yuan, Turning to operating expenses, sales and marketing expenses in the first quarter were 523 million compared to 592 million in Q1 2022. The decrease was primarily attributable to a decline in marketing and promotional spending. Product and development expenses were $324 million compared to $355 million in Q1 2022. Finally, general and administrative expenses were $149 million compared to $137 million in Q1 2022. The same period of the previous year was 2.41 billion yuan, which is 9.1% of the total growth. The net profit from the home of the car is 4.84 billion yuan, which is 4.38 billion yuan, which is 10.5% of the total growth. So we delivered operating profits of $263 million in the first quarter compared to $241 million in the corresponding period of 2022, representing an increase of 9.1% year-over-year. Adjusted net income attributable to Auto Home Inc. was $484 million in the first quarter compared to $438 million in the corresponding period of 2022. representing an increase of 10.5% year-over-year. In the first quarter, the net profit per share has been adjusted to 0.98 yuan. In the same period last year, the net profit was 0.87 yuan. In the first quarter, the net profit per share has been adjusted to 3.92 yuan and 3.91 yuan. In the same period last year, the net profit was 3.47 yuan. None get basic and diluted earnings per share in the first quarter for both 0.98 compared to both 0.87 in the corresponding period of 2022. None get basic and diluted earnings per ADS in the first quarter for 3.92 and 3.91, respectively, compared to 3.47 for both in the corresponding period of 2022. As of March 31, 2023, our balance sheet remains very strong with cash, cash equivalent, and short-term investments of $22.71 billion, we generated net operating cash flow of $1.03 billion in the first quarter of 2023. On November 18, 2021, the Car Home Board was authorized to approve a 12-month, $200 million stock return plan. On November 3, 2022, the board of directors was authorized to extend the deadline of the stock return plan to November 17, 2023. As of May 5, 2023, we have already repurchased about 3.94 million U.S. stocks. The total amount is about 1.19 billion yuan. On November 18, 2021, our Board of Directors authorized a share repurchase program under which we were permitted to repurchase up to $200 million of auto homes ABS for a period not to exceed 12 months thereafter. On November 3, 2022, our Board of Directors authorized an extension of the share repurchase program for another 12 months expiring on November 17, 2023. As of May 5, 2023, we have repurchased approximately 3.94 million ADS, a total cost of approximately US$119 million. These are the financial data of the company. Now, let's answer some questions. With that, we are ready to take your questions. Operator, please open the line for the Q&A session. Thank you.

Certainly. We will now begin the question and answer session. To ask a question, you need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Xiaodan Zhang from CICC. Please go ahead.

So thanks, management, for taking my questions, and congratulations on the strong quarter. So first of all, could you please share your views on the structural opportunities for the outdoor market in the upcoming quarters? And also, could you update us on the progress of the new retail model for any of these? and your expansion plan for the offline experience in stores for the rest of the year. Thank you.

Okay, this first question, I will answer it. I am Longquan. Thank you for your question. In fact, the situation in the first quarter, as you can see, the test seems to be more remote. According to the data of the annual meeting, we can see that The retail sales of used cars in the first quarter fell by 13.4% in the same ratio. The reason for this is because the Spring Festival is relatively early this year. The second reason is that some of the discount policies for purchasing cars will expire at the end of 2022. This caused the demand for purchasing cars to be released in advance last year. In fact, there is another very important reason. In March this year, 受到国六B政策的影响那么车市降价促销的价格战使得消费者的观望情绪是加重了那么三月份的乘用车销量是同比是持平的从陈年会公布的四月份的销量数据来看同比增长还是比较不错的那么达到了55.5%环比增长是2.5%那么从这上面我们可以看到了 The joy of the price war is gradually fading away. Consumers have restored rational consumption. Observation has been eased. The overall test should start to resume.

Okay, Mr. Long is taking the first question. As we all see, in the first quarter, we see that the auto market is a little bit sluggish. And according to the statistics of CPCA, from January to March, the cumulative rate of sales of passenger vehicles dropped by 13.4%. One reason is because of the early spring festival, and the second reason is because some of the car purchase presidential policies already expired by the end of 2022, and the car purchase amount has been released in advance last year. And another important reason is because since March, we see that there's very strong impact of domestic 6B policy, and there's also the price increase. a cut as well as the promotion and the price wall, which further worsened the bid and queue attitude of the consumers. So in March, we see that the passenger vehicle sales remain flat. However, if you look at the CPCA statistics released in April, there's a worldwide growth of 55.5% and month-by-month growth of 2.5%. We see that price will have been fading away as the consumers are getting back to the reasonable consumption. And green energy attitude is also mitigating. The entire auto market started to be stabilized and to recover.

那么你刚刚问到了关于这个油车和新能源车的这种情况 是吧 我想具体来看的话呢 这个南油车的这个市场啊 是持续这个走弱的 那么它销量的这个降幅呢 目前来看是持续在扩大 那么22年的话呢 南油车的销量是同比下降的是13.3% 那么今年一季度的话 Q是同比下降的是23.4% Then in early March, Hubei was leading the sale of this price drop, followed by many local manufacturers in the country, and consumers began to hold back. The mood of the public is getting stronger, so this has a certain negative impact on the sales of fuel cars. At the same time, with the further improvement of the infiltration rate of new fuel cars, the sales of fuel cars will be further squeezed.

You also asked a comparison between ICE cars and EV cars. So generally speaking, you can see that ICE car market continues to be weakening, and you can see that the reduction of the sales continues to expand. In the year 2022, the ICE car sales dropped by 13.3% YOY, and in Q1 of this year, there was a YOY decrease of 23.4%. And since March, Hubei province took the lead in the production in the price cut as well as promotion, and after that, many other OEMs nationwide started to follow up, and consumers started to hold their money and to wait and see a better attitude. So you can see that these are all imposing negative impacts on the ICE car sales. Well, in the meantime, with the further improvement of the AED penetration, we believe that the sales of the ICE cars will be further squeezed.

那么对于新能源车的情况来看呢 虽然它的销量增速放缓了 但仍然保持强硬的这个势头 那么渗透率的将会持续提升 新能源的这个销量我们可以看到了它的增速啊 从20年的Q4呢开始放缓 那么23年的这个Q1的销量是同比是提升是22.4%的 但是我们可以看到它的渗透率已经达到了30.8% Chen Lianhui also predicted that the penetration rate of new cars in China in 2023 is expected to reach 36%. In the Shanghai car exhibition that just ended, there are more than 150 new cars in the exhibition. We can see that there are nearly 100 new cars. There are more than 1,500 cars in the exhibition.

In terms of the NEVs, the NEV sales growth started to slow down. However, the momentum is still quite strong, and penetration keeps increasing. So since Q4 of 2022, the new car sales of the NEV started to slow down. And in Q1 of 2023, the YY sales increased by 22.4%. However, the penetration already hit 30.8%. CPCA also forecasted that in 2023, domestic NEV penetration is expected to hit 36%. In a just-concluded Shanghai Auto Show, we see the launching of about 150 new car models, among which almost 100 are NEV new car models, and among the 1,500 cars in exhibition. Almost more than half of them are actually NEV cars and become the mainstream of auto show. So you can see that competition of the NEV market is also quite fierce. We think that in the future, the NEV market still got a huge potential for growth and we're quite promising about the future development.

In addition, in fact, our national development committee in April It also said that it will improve the policy system as soon as possible. So clearly two years, two years, three years later, the reduction policy of car construction. Since the end of April, a series of important work meetings in the central government have also pointed out that it is necessary to consolidate and expand the development advantage of new energy vehicles, to accelerate the construction of facilities such as charging windows and energy storage, and the transformation of the power grid. At the same time, many governments across the country

besides from the policy side in april of this year ndrc also expressed that they will quickly improve the policy system and also identified that after 2023 they're going to launch the tax incentives for the new car purchase and since the end of april a series of important working conference of the central government also pointed out that we should continue to consolidate and further expand the development strength of the NEV and also accelerate the facility development, including the charging piles, energy storage, as well as the supportive power grid. Well, in the meantime, you can see that many local governments are also launching their consumption incentive policies for Q1 to promote auto consumption.

So the domestic test will gradually be released under these good policies. We are optimistic about the future development of domestic testing. We also believe that in the second quarter, countries and places will come together to propose some policies to promote the development of the entire industry. So the test will also restore stability and maintain a stable and good development.

With the stimulation of all of this variable conditions and the policies, we believe that the car purchase demand will be gradually released for domestic consumers. We are quite bullish about the future trend of domestic auto market and we believe that since Q2, the national as well as the local governments will continue to launch relevant policies to promote the development of the entire auto industry and auto market will gradually come to the stable development and will also try to get even more promising future.

Thank you Mr. Long for answering the first question. Now I will answer the second question. This is about new sales. Last year, we launched the first new energy offline experience store in Shanghai. This is a brand new model. Users can enjoy the full-scale driving experience of the forest in the energy space station of the car company and see the 360-degree full-shape and full-shape dynamic opening of new energy vehicles across many brands in a one-stop way. It can also achieve the horizontal alignment of many models. Thank you, Mr. Long, for taking the first question.

And Mr. Deng will take the second question. So this question is about the new retail model. And in Shanghai last year, we firstly launched our new energy offline experience store, which is a brand new model and gained great recognition from our consumers. And users can enjoy an immersive experience hold a holographic experience in the auto home energy space. And through the one stop manner, we can actually have a 360 degree immersive experience of multiple new car models and the holistic dynamic breakdown of the EV. And we can also have a lot of horizontal comparison of different types of the car models. These kinds of new retail model really shorten the decision-making cycle of the consumers and greatly enhance the car purchase efficiency and also being recognized by the consumers.

This model is also recognized by our users. Currently, Xilinxiu Experience Store has reached a comprehensive cooperation with more than 30 brands. This also gained great recognition from our OEM clients. So you can see that now the retail experience store has already entered into cooperation

in terms of the holographic modeling with more than 30 brands. According to the plan, uh q2 we're going to launch the franchising model and there will be two franchisee stores gradually uh being launched online well in the same time we're also going to start the franchise store development in the other cities in china everything has been well underway and in the second half of the year all of the franchise stores will be gradually opened and then we will share with you more information about our franchise stores

The new sales mode is a test under the line. The new energy mode under the line is a combination of the online and offline modes. This is one of our core advantages. In the future, we will focus on combining the online and offline modes to provide a new sales mode for new energy cars.

So we think that this is actually a new trial for Auto Home in terms of the online plus offline convergence model in terms of the new retail. And we believe that this will become one of our core competitive ads. So in the future, we will continue to focus on this online plus offline convergence model.

Thank you. The next question, please. Thank you.

Our next question comes from the line of Richie Sun from HSBC. Please go ahead, Richie.

What is the driving force behind the growth of our income and profits this year? This is the first question. The second question is about the recent popular AIGC and large model opportunities. I would like to ask what opportunities and challenges will we have for the media platform? 我们在这方面会有什么的布局,还有对这方面的基于有什么看法呢? 谢谢,I will translate it myself. So first of all, can I ask about the used car business revenue growth, how is the recovery trend, and also what is the profitability level right now, and how should we think about the 2023 revenue growth and the profit growth drivers for this part of business? Second part of the question is regarding AIGC and also large models. How should we think about the challenges and also opportunities brought to online vertical platforms like Auto Home? And what is our plan to tap into this opportunity? Thank you.

Thank you. The first question is about second-hand cars. The overall market of second-hand cars is, although there are new cars in the first quarter, it brings a little pressure to the overall industry of second-hand cars, but in general, the growth of second-hand cars is still good. The first question is about the use of cars.

So I think that in Q1, even though, you know, the new car price cut imposes some pressure for the used car business as a whole. However, you can see that for Autohome, you know, we have a very good combination of our used car business with TTP business, and they have entered into a highly efficient business. So you can see that used car business as well as TDP business all experience a growth in terms of the revenue, among which TDP revenue grew by a YOY of 25%.

From the perspective of profit, we have to look at the two. Our traditional second-hand car line-up business, in fact, its profit is good, almost the same as our new car. Day-to-day shooting has continued to gain profit, especially in the first season. In the traditional way, it's called a second-hand section, but day-to-day shooting has also gained profit. Therefore, our overall profit is relatively good. However, because of its auction mode and offline testing mode, TintinPay's profit rate may be relatively lower than the original profit rate of our family. However, their development mode is also in gradual improvement.

And in terms of the market, you can see that for our traditional use of card business, we have types of very good growth in terms of the marketing. Well, at the same time, TTP also keeps generating profits and also realize that the first ever profitable quarter. So you can see that for TTP, since it adopted the auction plus the testing model, so comparing with the used car business, the margin used to be lower. However, we think that in the future, we will continue to grow the margin of TTP in a better way.

As for the driving force after income and profit increase, I think it mainly comes from two aspects. The first is the growth of the second-hand car industry in China. Everyone is optimistic because the main motivation of the second-hand car is its maintenance. The maintenance of Chinese cars has been increasing, and the overall sales of second-hand cars will also rise. In the past few years, the epidemic has limited some offline activities. As a non-standard product, second-hand cars need a lot of offline communication. So talking about the drivers for the revenue as well as margin. So firstly, let's talk about the used car business. Used car business growth is heavily dependent on the car parts.

you can see that overall car park in China has been constantly on the rise. As a result, the used car business will also be on the rise. Over the past few years, with the limitation of COVID-19, there are fewer communications offline because you can see that used car business need a lot of offline communication because they are all the non-standard products. So we believe that in the next two years, the used car business will develop in a very promising manner.

The second driving force comes from ourselves. In the entire industry, we are leading in the second-hand car industry. We have our own traditional second-hand car business. We drive cars every day, and we also have the co-efficient of Ping'an Group. So we will build a second-hand car second-hand shop, a second-hand shop, a second-hand shop, a second-hand shop, a second-hand shop, a second-hand shop, a second-hand shop, a second-hand shop, a second-hand shop, a second-hand shop, a second-hand shop, a second-hand shop,

another important driver comes from autohome itself we can see that in terms of the second hand car business we have been taking the lead besides you can see that we're also going to play the synergy between our traditional user card business ttp business as well as pm group as a whole so we will continue to actually built the car buying and car selling one-stop plus SaaS product to hold chain one-stop services platform so as to expand our competitive edge and to gain the leading position in the entire industry.

The second question is about the opportunities, challenges, and support from AIGC. We see it this way. First of all, AIGC is a tool. This is a tool that we can use. As a tool, the earlier we get to know it, the earlier we can use it, the more advantage we can gain in competition. This is why we cooperated with Baidu at the first time to introduce AI tools into Zhijia's platform.

Second question is about AIGC. First of all, I should say that AIGC is a tool. So the earlier you get familiar with this instrument and tool, the earlier you adopt it and use it, you will gain the early competitive edge. That is why we had to enter into cooperation with Baidu in the first time.

All right. For AIGC alone, it is not enough. We need it to combine with other ecosystems. For example, it can combine the contents of OGC, UGC, and BGC to produce better content. In addition, it is also an important part of the ecosystem strategy to help us and the creators create a C-end. Of course, in addition to AI Decision, we also have a series of other AI intelligent tools that are already being used and can gradually improve their performance. For example, smart call, cloud selection, etc. A series of AI-informed support in R&D, together to help our customers achieve a cost-effective performance.

However, only AIGC itself is far from enough. We also need the other components in the entire ecosystem, including OGC, UGC, and PGC, set to create better content. So together with the content creator, we're going to create a CN ecosystem strategy. So besides, we also have the other AI smart instruments, for example, the smart outbound, the smart selection, as well as the AI-assisted dialogue assistance assistance etc so all of those ai instruments will have the dealers to cut their cost and improve efficiency thank you operator next thank you our next question comes from the line of thomas chong from jefferies please go ahead thomas

Thank you for taking my question. I have two questions. So first, I can manage my share on our target for the data product and the plan for new product launch. My second question is on the use of cash. Can management share our future plan? I will translate myself. The second question is about our current usage situation and future plans. Thank you. Thank you.

I will answer first about the goal of digital products and what kind of new products. Our existing products will continue to be optimized and delivered. to enhance the efficiency and usability of the product. Because a data-based product is different from other products. It requires customers to gradually get familiar with it and gradually combine it with their own business to be able to play its main function. In this respect, we need to continue to do work to expand the coverage of our customer groups and also increase the penetration rate of their products.

So let me firstly take the question about the data products. In terms of our existing products, we will continue to optimize and iterate our existing data products and to sort of improve the effectiveness as well as the usability of the product. Because, you know, data product is different from the other ones. The users need to get familiar with the products and combine it with their own business so that to Let it play the biggest role. So we will continue to further expand the coverage of the client base and to further enhance the penetration of our data products.

The new product is also a part of our continuous improvement and promotion. In the first quarter, we launched a cloud-based smart cloud for our main market customers and a cloud-based data product for our retail customers. In the future, we will

In terms of the new products, we will also keep launching the new products. For example, in Q1, we have launched the eBay Smart Cloud targeting the OEM clients. And we also have the smart selection as well as the other data products targeting the dealer clients. So in the future, we're going to combine our decision-making models as well as the menu synergy so as to launch more proactive smart operation products.

In the first quarter, there are more than 20,000 subcontractors of commercial data products. The number of products cooperating with the military and the military income have a two-digit increase. We continue to look forward to the development of data products of new sellers. We have already formed a huge array of SaaS and DRM plus products. We will continue to increase our investment in data products and product development, maintain competitive advantages in this field, and also help a wide number of customers to complete digital transformation.

And in Q1 of this year, you know, the paying users for the dealer's data products already exceeds 20,000. And you can see that the per store average corporation product as well as the per store revenue all got double-digit growth. So we're quite bullish about the future data product development for the dealers. And we also have already developed a SaaS plus CRM plus product matrix. We're going to strengthen our investment and input in data technology as well as product R&D so as to maintain our competitive edge in this area and also to facilitate and enable our clients in their digital upgrading and transformation.

Another question is about the use of cash and future plans. The company's financial situation has always been relatively good and very healthy. As for cash, there are only a few directions below. First, we have increased the proportion of our branches this year to repay our customers. In the future, we will also consider further increasing the repayment of our shareholders.

Your second question is about how we spend our cash as well as the future plan. I think that Autohome is always financially sound. So, as always, we have been increasing the proportion of dividend payout and we have been increasing the payout ratio. In the future, we will continue to consider about increasing our return to the shareholders.

I've already talked about it, so I won't go into details. Regarding this business, will always be our main focus. If we have a good opportunity, we will definitely make such investments in our business. For example, we are now looking at the related aspects of the spirit beast.

In terms of the shares buyback and repurchase, I have already elaborated on that and won't go into any details. So in terms of the business investment, we have been keeping a close eye on the potential business opportunities. If there are good chance, we're going to increase the investment in particular in terms of new retail.

Maybe we take the last question since time is limited.

Certainly. Our last question comes from the line of Brian Gong from Citi. Please ask your question, Brian.

Thank you. Thank you for accepting my question. Although the sales of new cars in the first quarter are relatively weak, we see that the sales of our main airport ads are still very good. So I would like to ask how we should look at the growth of the main airport ads in the second quarter, because we know that on the one hand, I will translate myself. Thanks management for taking my question. Despite the first quarter, the auto sales was kind of weak, our OEMS growth decently. So can management share your view on the second quarter OEMS growth, given on one hand auto sales still kind of weak, but on another hand, there have been a lot of new models rolled out in Shanghai Auto Show. Thank you.

We think it's like this. First of all, the automotive industry is always a relatively longer-term industry. Short-term sales attempts will not have a very short-term reaction to the advertising in this area and their marketing budget.

So to address this topic, first of all, I want to say that auto industry is a relatively long-term industry. So the short-term sales, volatility, and fluctuation will not significantly impact the OEMs as well as their marketing budget.

As you can see, in terms of our ad revenue, there are several seasons. Although there are ups and downs in the market, we are still relatively stable.

If you look at auto home, the ad-related revenues, you can see that over the past several quarters, even though there are fluctuations on the market, however, our revenue from the ad business continues to be stable.

From the market, we can see that there are a lot of new models in the Shanghai Motor Show. There will be new models in the future. This will definitely accompany a lot of advertising, brand promotion and promotion. This is an important opportunity we see.

So I think that in terms of the market opportunities, you just also mentioned that Shanghai Auto Show, there are a lot of new car models, and I believe that in the future, there will be continuous launching of the new car models. And I believe that with new car launching, we also need more ads as well as the marketing expenses. So here, we would like to see more opportunities for us.

This is a bit more complicated. The sales of the first-degree car We think that the second quarter is also quite complicated because it is also affected by the national currency policy. OEMs may have a more comprehensive strategy at the marketing end, including direct price drop or some other options, which may be an option for them.

And for the traditional ICE vehicles, it will be a little bit more complicated. You can see that in Q1, the sales dropped by 23% while one. So we think that in Q2, things will be even more complicated because there will be the impact of the national 6B policy. So the OEM will have many different choices, for example, price cuts, or they may adopt other measures to mitigate the circumstances.

So I think the overall advertising market in the second quarter is still a market that has opportunities and challenges. As I said earlier, we always have two forces. One is the overall performance of the market. Can it bring us a general growth? The second is that we are going to develop some new

So generally speaking, we think that in Q2, in terms of the ad business, there are both opportunities as well as challenges. Just like what I mentioned for our user card business, there are two drivers. The first thing is from the overall market performance. We would like to pursue general growth together with the market trend. And the other driver comes from our own services. We would like to expand and tap into the new areas and offer new services to our clients. So generally speaking, we're going to better serve our clients and to further improve our performance in the ad business.

okay uh thank you operator that is the end of the q a session of beta thank you we have reached the end of the question and answer session thank you all very much for your questions i'll turn the conference back to management for closing remarks oh thank you

Thank you everyone. Thank you very much for joining us today.

Appreciate your support and looking forward to updating you our next quarter early conference for a few months time. So in the meantime, if you have any questions or comments, please feel free to contact us. Thank you very much. Goodbye.

thank you that concludes today's conference call thank you for participating you may now disconnect