Autohome Inc.

Ladies and gentlemen, thank you for standing by for Autohome's fourth quarter and full year 2023 earnings conference call. At this time, all participants are in the listen-only mode. A question and answer session will follow management's prepared remarks. As a reminder, this conference call is being recorded. If you have any objections, you may disconnect at this time. A live and archived webcast of the earnings conference call will also be available on Autohome's IR website. It's now my pleasure to introduce your host, Mr. Sterling Song, AutoHome IR Director. Mr. Song, please go ahead.

Thank you, operator. Thank you. Hello, everyone, and welcome to AutoHome's fourth quarter and full year 2023 earnings conference call. Earlier today, AutoHome distributed its earnings release, which can be found on the company's IR website at ir.autohome.com.cn. Joining me today on today's call are Chief Executive Officer, Ms. Tao Wu, and the Chief Financial Officer, Ms. Craig Yansung. Management will go through their prepared remarks, which will be followed by a Q&A session, where they will be available to answer all 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 Education 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 filing with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange. AutoHome doesn't undertake any obligation to update any forward-looking statements except as required under applicable law. Please also know that AutoHome's earnings press release and this conference call include discussions of certain unaudited non-GAAP financial measures. A reconciliation of the non-GAAP measures for the most directly comparable GAAP measures can be found in our earnings release. I'll now turn the call over to Auto Home CEO, Mr. Wu, for opening remarks. Please go ahead, Mr. Wu.

Thank you, Sterling. Hello, everyone. This is Tao Wu, CEO of Auto Home. Thank you for joining us in our earnings conference call today. In 2023, the performance of our operations and finance will continue to improve. Innovative business continues to lead to the overall performance of the family of cars to continue to improve. The total revenue of the whole year reached RMB 71.8 billion, which is a 3.5% increase. Online sales and other business income achieved a 14.6% increase in the same ratio. The net revenue ratio also increased to 30.6%. Among them, data products and day-to-day shooting continue to maintain a good rising trend. The revenue has also increased by more than 10% in two years. Zhijia's new energy business also continues to maintain a strong growth trend. The annual revenue has increased by more than 80% in the same ratio. The revenue ratio has also increased by nearly 18% in the same ratio. In terms of profits, it belongs to the home of cars all year round. The adjusted net profit is 21.6 billion yuan. The adjusted net profit rate has reached 30.1%. In addition, we have completed a total of 200 million US dollars in stock repurchase plans over the years, and have greatly increased the share price of Fung Hong. It is true that it has given back to major shareholders and has further implemented the commitment to increase shareholder returns.

We delivered solid operational and financial results in 2023 with overall growth driven primarily by our new businesses. Total net revenues for the year grew by 3.5% year-over-year to 7.18 billion RMB. Revenues from the online marketplace and other businesses increased by 14.6% year-over-year and accounted for 30.6% of total revenue. Notably, we continue to see strong growth in revenues from data products and TTP, which each increased by more than 10% compared to 2022. We also saw robust growth in our NEV business, with revenues for the year increasing by over 80% year-over-year and accounting for nearly 18% of total revenue. Adjusted net income attributable to auto home for the year was 2.16 billion RMB with adjusted net margin of 30.1%. We also completed a US dollar 200 million share repurchase program and significantly increased the dividend payout to shareholders, demonstrating our commitment to generating returns for investors.

At the end of the year, we were in AI product technology. the year of the breakthrough in the field of large language model applications and model innovation. This year, we continue to launch AI-driven data products and promote the application of large language models to the entire industry. The model decision-making is coordinated with artificial intelligence, which has further improved the service level of data products. Our new retail strategy is also on the ground. Many joint stores are also spreading rapidly nationwide. The layout of the car company's energy space has expanded to 20 floors, especially deeper into the lower-level market of the new energy track, focusing on opening up potential opportunities for mid- and low-end cities. The gradual establishment of car companies' offline channels has enabled the company to effectively extend and expand its online capabilities. At the same time, the brand influence in the new energy users has also been quickly improved,

In 2023, we made breakthroughs in the application of AI and large language models as an innovative new business model. We launched new AI-driven data products, deployed large language models in various business scenarios, and combined model-based decision-making with human expertise to enhance the service quality of our data products. We also made rapid progress in expanding our physical new retail presence. particularly in mid- to low-tier cities, where we see significant potential for growth as the NEV market evolves. Our auto home energy space doors, as a strong offline channel to complement our online capabilities, are now present in 20 cities across the country, helping us build brand awareness among NEV users.

Qitezjia has always been a pioneer in digitalization and business innovation in the Chinese automotive industry. has been actively promoting and leading the digital transformation of the entire industry. Looking forward to the future, we will continue to maintain the leading position in these areas, and create differentiated competitive advantages in four aspects. First, accelerate the promotion of the cooperation between Ping'an Group and Zhijia Group. The focus is on the construction of car owners, operation, repayment and establishment of group resources, and the improvement of Zhijia's service capability in two directions. to create unique advantages that I have. Second, strengthen the quality of content to strengthen users' mindsets with professional brands. Third, use users as the center, so that more users can be more convenient to get used to, see, buy, use, change, car, all-lifetime quality one-stop service. Fourth, deepen the innovative business model, Autohome has always been at the forefront of digitalization and business innovation.

proactively promoting and leading the digital transformation of the entire automotive industry in China. Looking ahead, we are committed to maintaining our leadership in these key areas and creating unique advantages through the following strategies. First, we'll accelerate the collaboration with Ping An Group and focus on creating a closed-loop ecosystem for car owners and leveraging Ping An's resources to enhance our service capabilities. Second, we'll enhance the quality of our content and reinforce Autohome as the go-to brand for all things automotive, creating a strong and lasting brand image as the leading authority in this space. Third, we'll put users at the center of our efforts, providing convenient access to high-quality, comprehensive services throughout the entire car ownership lifecycle. Fourth, we'll deepen our innovative business models focusing on developing our auto home and state stores and TTP. We believe that by aggregating industry resources, leveraging Ping An's potential business opportunities and user resources, we can create a unique value proposition and establish a diverse and dynamic ecosystem that empowers our long-term growth.

Next, let's have Mr. Zeng Yan, CFO, introduce the company's four-year record in 2023 and the business and financial situation of the year.

With that, I will now turn the call over to our Chief Financial Officer, Greg Zeng, for a closer look at our fourth quarter and full year 2023 operating and financial results. Thank you, Mr. Zeng. Hello, everyone. I am Zeng Yan, Chief Financial Officer of Car Home. Thank you, Ms. Tu. Hello, everyone. I'm Craig Sun, the CFO of Ultimate Home. In 2023, we made user experience our core focus, creating a comprehensive system encompassing content tools and services to provide our users with high-quality, convenient, and efficient auto consumption experiences. In the fourth quarter, we launched the New Energy Breakthrough Plan, which provides professional evaluation, solves user pain points, and speeds up user decisions from new energy car collision safety, battery safety, and intelligent driving safety. Currently, the total network exposure of this super IP is up to 3.25 billion, and the total network playback volume In addition, the new energy super test that we have recently launched has covered the real winter car usage scene for more than two months and provided an objective purchase reference for users, and used it as an opportunity for multiple parties to participate in the construction of a car measurement system that is closer to the consumer's needs, to promote industry development, and to enhance the product and user experience of car brands. In the future, we will continue to follow the trend of user demand and create a more diverse content ecosystem, and through more widespread transmission, let Zhijia's high-quality content reach more users. The data of Quest Mobile shows that in December, the number of Japanese users reached 68.19 million at the mobile end of Zhijia, which increased by 25.4% in the same period in 2022, which once again proved the effective content and user growth strategy of Zhijia. In the fourth quarter, we launched NEV Breakthrough Plan, a comprehensive evaluation program that assesses NEV safety across the three dimensions, collisions, batteries, and intelligent driving. This program, which aims to address user concerns and accelerate the decision-making process, has received 325 million impressions and over 200 million views across the entire network. Additionally, we launched NEV Supertest, a program which carries out real-world evaluation of NEV performance over a period of two months. This initiative gave us the opportunity to collaborate with other parties on developing a more consumer-centric vehicle evaluation system, promoting the overall NEV category and helping automotive brands develop strong products with a better user experience. Looking ahead, We maintain our focus on catering to the evolving needs of users so that we can create a rich and diverse content ecosystem that provides value and drives engagement. We also leverage a broad range of online channels to ensure that our high-quality content reaches the widest possible audience. According to Quest Mobile, our mobile DAU increased by 25.8%. 4% year-over-year to reach 68.9 million last December, demonstrating the effectiveness of our content-based user growth strategy. and the regional car consumer market of different regions and different scale cities such as China and North China. At present, the number of cooperating brands in the energy space station is gradually increasing, and the 3D all-in-one car model has covered more than 70 market mainstream models. We continue to expand our investment in the new retail model that digitizes the multi-brand feature of the energy space station. In 2024, we plan to continue to open joint stores in about 30 cities, By the end of this year, the overall new energy car service ecosystem will penetrate into about 50 cities, covering more extensive areas in a wide range of areas, and reaching more levels in depth. In terms of quality, it provides a high-quality one-stop car service experience for more consumers. In addition, the income from new energy brands in the past two or three years has increased by 81.6%. Our NEV business has grown rapidly with the expansion of auto home energy space to 20 cities across the country. We've upgraded our brand technology and store services to provide a high-quality consumer experience across regional auto markets in East, South, Southwest, and North China. We've also increased the number of energy space brand partners and expanded our offering of 3D holographic car models to include over 70 mainstream models. We remain optimistic about the potential of this new retail model, which is distinguished by its cross-brand and digital approach. Looking ahead to 2024, we plan to fully expand our footprint by opening franchise stores in around 30 additional cities. By the end of this year, our NEB service ecosystem will have a presence in around 50 cities, allowing us to provide a comprehensive range of high-quality one-stop automotive service experiences to consumers across the country. For full year 2023, our revenue from NEB brands increased 81.6%, demonstrating the strength of our offerings in this area and our ability to outperform industry sales growth rates. In terms of digitalization, 2023 is the year when our AI technology and large language model are scaled to promote applications. Based on AI technology and big data capabilities, we have launched cloud-based selection, physical communication, and other products to help marketers reach high-quality users in layers and support the needs of planning and processing in different business scenarios. Based on the language model, we have launched a multi-business scenario application that covers products such as AIGC, business managers, and other products. Through digitized operation, it helps the business to reduce cost and increase efficiency. In the past two or three years, the number of e-sports income and e-sports cooperation products of digitized retailers has increased by more than 20%. The penetration rate of business partners is also increasing. We also made significant progress in our digitalization efforts in 2023 as we applied AI technology and large language models across a wide range of products and services. We launched products such as Cloud Smart Selection and Qi Xin Tong, which leverages our AI technology and big data capabilities to help dealers engage with high-value users and manage instant messages with users in different scenarios. We also introduced applications based on large language models such as AIPC and Operation Butler, helping our dealer customers reduce overall costs and increase efficiency. In 2023, the average revenue for data products to dealer stores and the average number of data products adopted by each dealer store both grew by over 20% compared to the prior year, as the number of dealer customers for data products continued to ramp up, driving a 38% year-over-year increase in dealer data revenue for the year. We expect our digital products to maintain their strong growth momentum, contributing to a more diversified revenue mix for Autohome. In the second-hand car industry, on the one hand, we surround the second-hand car business scene, provide rich product combinations to second-hand car dealers, making their daily management more intelligent. For example, a station is a car frame and car frame survey platform, providing convenience for second-hand car dealers to survey the car frame and car volume, We also launched a second-hand car version of the car dealership to provide comprehensive information management services to retailers. On the other hand, to establish a new retail store, Zhentian Pai Che also quickly realized the industry. In 2023, Zhentian Pai Che's revenue increased by more than 10% in the same ratio. In terms of our used car business, we offer a wide range of products to help used car dealers manage their daily business operations more efficiently. For example, our one-stop platform for vehicle condition and price inquiries provides a convenient way for dealers to access relevant information and has received positive feedback. We've also launched a membership product specifically designed for used cars, providing dealers with a comprehensive information management platform. On the other hand, we have successfully expanded TTP's business through new retail stores. In 2023, TTP delivered a year-over-year revenue growth of over 10%. Overall, the growth of TTP's revenue in the past two or three years has been steady. The revenue structure continues to improve. The flow of users is growing steadily. New sales business is entering a fast-growing period. The overall business is steadily moving forward step by step. Looking forward to the future, we will continue to firmly invest in new models, new technologies, and new products to actively explore and safely accumulate deep co-operative opportunities in business, resources, and the user field to achieve the next stage of growth and continue the new dynamic. We have steadily grown revenue while achieving a more optimal revenue mix and driving a significant increase in user traffic. Our new retail business is growing rapidly and our overall business is making steady progress. Looking ahead, we will continue to invest in new models, technologies, and products and proactively explore opportunities for further business, resource, and user synergies with Ping An Group. Through this effort, we aim to create new growth momentum and position ourselves for continued success in the future. Next, I would like to explain to you the fourth quarter of 2023 and the main financial situation of the year. Please note that I will only use RMB as a currency unit in today's discussion, unless there is another explanation. Let me walk you through the key financials for the fourth quarter and full year 2023. Please note that as with prior course, I will reference RMB only in my discussion today unless otherwise stated. Net revenues for the fourth quarter were $1.91 billion. Breaking down by segment, media services revenues were $500 million, leads generation services revenue were $841 million, and the online marketplace and others revenues were $569 million, up 14.8% year over year. In the fourth quarter, the operating cost was 3.68 billion yuan. In the second quarter, the same period was 3.71 billion yuan. In the fourth quarter, the interest rate was 80.8%. In the second quarter, the same period was 80.4%. Moving on to cost. Cost of revenues in the fourth quarter was 368 million compared to 371 million in Q4 2022. Gross margin in the fourth quarter was 80.8%. compared to 80.4% in Q4 2022. 营业费用方面, 第四季度销售及市场费用为7.3亿元, R2年同期为6.73亿元, 研发费用为3.56亿元, R2年同期为3.13亿元, 最后一般及管理费用为1.57亿元, R2年同期为1.03亿元, Turning to operating expenses, sales and marketing expenses in the fourth quarter were $730 million compared to $633 million in Q4 2022. Product and development expenses were $356 million compared to $313 million in Q4 2022. Finally, general and administrative expenses were $157 million compared to $103 million in Q4 2022. In total, the business profit of the fourth quarter of Car Home was $3.67 billion, and the same period of 2012 was $5.13 billion. The net adjustment profit of Car Home was $5.03 billion, and the same period of 2012 was $6.69 billion. Overall, we delivered operating profits of $367 million in the fourth quarter compared to $513 million in the corresponding period of 2022. Adjusted net income attributable to auto home was $503 million in the fourth quarter compared to $669 million in the corresponding period of 2022. In the fourth quarter, we adjusted the basic and In the fourth quarter, the net adjustment basis and the U.S. stock deposit profit were divided into 4.15 yuan and 4.14 yuan. In the second quarter, the net adjustment basis and the U.S. stock deposit profit were divided into 4.15 yuan and 4.14 yuan. Nanogap's basic and diluted earnings per share in the first quarter were both 1.04 compared to 1.36 and 1.35 respectively in the compounding period of 2022. Non-GAAP basic undiluted earnings per ADI in the first quarter were 4.15 and 4.14 respectively, compared to 5.42 and 5.41 respectively in the corresponding period of 2022. Next, I will summarize the performance of our 23 years. The total income is 71.8 billion yuan, which is a 3.5% increase. Let me now turn to a short summary of our year 2023 full year results. Total revenues were $7.18 billion, an increase of 3.5% year-over-year. Of that, media services revenue were $1.87 billion, leads generation services revenue were $3.11 billion, and the online marketplace and other business revenue increased by 14.6% year-over-year to $2.2 billion. In addition, we delivered an adjusted net income attributable to auto home of 2.16 billion with adjusted net margin of 30.1%. As of December 31, 2023, Our balance sheet remained very strong with cash, cash equivalents and short-term investments of $23.55 billion. We generated net operating cash flow of $2.45 billion in 2023. In November 2021, the board of directors approved a stock return plan of less than $200 million in 12 months. In November 2022, In November 2021, Our Board of Directors authorized a share repurchase program under which we were permitted to repurchase up to USD 200 million of auto homes ADS for a period not exceed 12 months thereafter. In November 2022, our Board of Directors authorized an extension of this share repurchase program for another 12 months. As of December 31, 2023, we have completed this share repurchase program with repurchase approximately 6.73 million ADS for a total cost of approximately US dollar 200 million. With that, now we are ready to take your questions. Operator, please open the line for Q&A session.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 11 on your telephone and wait for your name to be announced. If you would like to cancel your request, please press the pound or hash key. Once again, to ask a question, please press star 11. The first question comes from the line of Thomas Chong from Jefferies. Please go ahead.

Good evening. Thank you for accepting my question. My question is about the development of the industry. Thank you. Thanks, management, for taking my questions. My question is about the industry outlook. Can management comment about the 2023 industry performance and how we should think about the trend and the outlook in 2024 as well as the opportunities ahead? Thank you.

First of all, thank you for your question. In 2023, we also saw that the domestic automotive industry has experienced such a trend of before low and after high overall. The sales of the whole year also created a new high in history. According to the statistics of the National Youth Association, the sales of the four-season hot country car market has recovered relatively well. The sales of retail have increased by 13.8%. uh uh uh uh uh The sales of commercial vehicles have increased by 5.3%. The main growth comes from new energy vehicles.

Thank you very much for the question. Actually, in 2023, we do see the trend of the first low and then high momentum in the auto market in China. In terms of 2023, the sales volume hit historical high. According to the statistics of the CPCA, in Q4, we do see a quick recovery in auto sales. especially for the retail sales, had gone up by 13.8% year over year. And quarter over quarter for the third quarter, it was up 1.4%. That is because close to the end of the year, there are a lot of promotions nationwide. For example, the offline auto show and providing consumption vouchers and coupons for car purchasing. and some of the D-stock for the combustion cars, which failed to meet the national six standards. And also, in this way, it boosted the sales. As for 2023, the passenger car sales have gone up by 5.3%, majorly due to the NEV cars.

At the same time, we also see that the industry is facing more serious challenges. All year round, it is in the roll-out of price profits. According to the data released by the National Youth Association, the total revenue of the automotive industry increased by 12% in 2023. The profitability is only 5%. Compared to the 5.8% of the profitability of the entire industrial enterprise, the automotive industry is still low. In addition, the data of the traffic association also shows that in the first half of 2023, We also see some challenges in this industry.

For example, it's very competitive in starting the price wars, and the margins have been squeezed. According to the data published by CPCA, for 2023, the whole auto industry, especially the revenue, has gone up by 12%. However, the margin is only 5%. Compared with the overall industrial corporates margin, which was 5.8%, the auto market margin is quite low. So in this way, according to the data of CADA, for the first half of 2023, there were 50.3% of the dealers suffered loss. And it's quite challenging for the 4S stores.

Looking into 2024, we firmly believe that the auto market will be a pillar industry for the national economy. It will be continuously supported by the government, especially at the beginning of 2024. We do see a lot of local governments

extended and the issue initiated a lot of supportive policy to stimulate the purchasing of the car for example in january guangzhou launched the subsidy for purchasing cars during the new spring and in jinjo they also issued consumption coupons for car purchasers so this would help to stimulate the market demand and also help to drive up the sales in the auto market According to CPCA, in 2024, the auto market will continue to stabilize and will continue to provide a good development momentum, which will achieve 3% of the growth.

is expected to reach about 40% in 2024. As the penetration rate of new energy vehicles continues to increase, the purchasing mentality of users is also changing. The competition for traditional fuel vehicles will be even more intense. From the strategy of each vehicle, whether autonomous or integrated traditional vehicles, they have begun to explore new energy vehicles and launch new energy vehicle development plans. This will also lead to continuous changes in vehicles,

Finally, in terms of the structure of the auto market, NEV had always kept growing in a rapid way. The penetration rate of the NEV has gone up from 28% back in 2022 to 35% in 2023. It will be expected to reach 40% in 2024. With the higher penetration rate, we do see some momentum change for the purchasers. And we believe that the competition in the traditional combustion car market would be even more aggressive. So we do see that no matter it's the domestic brands or the JV brands, a lot of the traditional car makers are trying to explore to launch a lot of NUV car models to fit into the NUV gross market. That would also help the OEM to try to be more innovative to enhance its competency to fit into this market.

In general, we believe that with more and more supporting policies to be released,

This would further stimulate this market and regenerate the consumption vitality. We are quite confident in 2024's auto market in China.

Thank you.

Thank you for the questions. One moment for the next question. Next question, we have the line from Xiao Dan Zhang from CICC. Please go ahead.

Good evening, Manager Chen. Thank you for accepting my question. I have two questions here. The first is that I see that the overall interest rate and operating profit ratio for the first two or three years have actually decreased significantly. Can you please introduce the investment plan for the cost and cost end in the first two or three years? How do we look at the future trend of this profit ratio? So thanks management for taking my questions and I got two questions here. So first of all, we have noticed that the gross margin and operating profit margin declined year on year in 2003. So what's your expectation for the margin trend in Q1 2024 and onwards? And secondly, could you please elaborate on your strategies for enhancing the synergies between Outerhome and Pion Group? Thank you.

Thank you. First of all, I would like to answer the question about the trend of interest rate and operating profit. In 2023, our gross profit rate will be slightly lower than in 2022. In general, when it comes to cost-benefit, we consider the diversification of the ecosystem, and today's business model and the past have made some changes. First of all, in terms of user operation, we have also increased the investment force in terms of user pull and vitalization. At the same time, Because of the opening of some of our new energy stores last year, we also provided some early activity subsidies. It will also provide some support for the workers and support for all kinds of commercial resources. Related training also attracts local consumers to try out. From the content, the entire industry now has higher and higher requirements for content. We will also include some targeted content. At the same time, we have also increased the investment in video and live content other than text. There is also a certain increase in cost.

Well, thank you very much for the question. Now talking about the GP margin, well, yes, in 2023, compared with 2020 or 2023, compared with 2022, we do see some slightly down in the GP margin. Well, now talking about the cost, we have provided more diversified content ecosystem. So that's why it drives up some of the cost. In terms of the user experience, we have enhanced the recruiting of the new customers and the promotion in this way. We also expanded about 20 renewable energy and UVs offline experience stores. And we provided some promotion subsidies and we also offered a lot of support for the dealers So in this way, we provided also training and a lot of other resources to attract the local consumers to come to the store to do the test drive and to boost the car sales. Now, in terms of the content, we have invested more and more in high quality content, not only the text and the picture based. We also invested in video and the live streaming. So in this way, it drives up some of the cost.

In terms of cost, we have also increased our investment in events such as the 818 World Car Festival and the 618 New Energy Car Festival, as well as in some cloud car exhibitions. We also have some high-quality IPs, such as our original New Energy Breakthrough Plan and New Energy Super Test. In this new environment, everyone's demand for content needs to be more professional and more unique. So overall, the investment in these areas is increasing. In terms of the trend of profit, we think that in general, the current challenges of profit in the entire industry are very big. And Zhijia should be on a relatively stable basis. It may indeed face some challenges. We will still Now in terms of the cost and expenses, we have enhanced some marketing

For example, we launched the 818 auto show, global auto show, and also online auto show, et cetera. And also we invested more heavily in a high quality IP. For example, we have initiated the NUV breakthrough plan and NUV super test. So in this way, we have providing more professional content. So we are focusing on providing professionalism and a unique content. Now, in terms of the momentum of the profit, we do see that the whole industry is under stress and is receiving a lot of challenges. But auto home has always been quite stable in terms of the profit, although we are facing with some challenges. But if we can strictly control the cost and expenses, and we would enhance efficiency as a long-term goal, we believe we can achieve a good balance.

OK. There is also a rich experience of being able to meet the needs of C-end users and serve B-end customers at the same time. And Ping'an Transport provides insurance for nearly 60 million car owners. Ping'an Transport's car owner platform has 200 million registered car owner users. Both companies are an important part of the car ecosystem. The two sides are also focused on connecting B-end service cooperation partners to provide customers with cost-saving and money-saving ultimate service experience for C-end users and customers. Later, the cooperation between the two sides will inevitably play an advantage in each other's fields. Zorii opens up online and offline channel resources to create a complete closed loop that looks at cars, buys cars, uses cars, and exchanges cars.

Now talking about the second question, which is about the synergy between older home and the opinion group. Now I want to make the comments. So first of all, older home and opinion group, each of them have its own unique characteristics as well as resources. And we can make our business quite complimentary to each other. For example, older home has a lot of traffic. We have about 70 million DAUs every day, and we have professional content on the tools. We have very enriched 2C and 2B services and experiences. For Ping An Group, they have about 60 million car owners, which are their insurance customers. And in their platform, there are about 200 million registered customers. So they also have a lot of enriched 2C and 2C services and experiences. So in terms of the service quality, we believe that each of us can play the merits of our strengths, and we can provide the online plus offline seamlessly connection and also providing the car owners for shopping the car, using the car, and as opposed to sales of the car services to create the closed-loop ecosystem for the car users.

To be specific, currently, we are also exploring some of the capabilities of both tools, content, and services. Both user scenarios and customer contact channels are such a breakthrough. In fact, by integrating resources to achieve 2C and 2B, we can do 1 plus 1 is greater than 2, and improve the overall, and also improve our home, such a leading product. In terms of the tools, content, and the services, we believe that we can create a lot of synergy. We can consolidate a lot of resources to create the one plus one is higher and more than two effect.

So in this way, we believe that our two companies are quite complementary to each other. And in this way, Autohome will leverage on the resource of Peon Group and to enhance our investment yield and to enhance efficiency and try to build our vision and make our vision, you know, realizing our vision. We want to be the first-class international to-be and to-see content provider, the tools and the service provider, and we want to be the unified, you know, auto purchasing and the auto sales service platform.

Thank you, operator. Please go ahead.

Thank you. Your next question comes from the line of Brian Kong from Citi. One moment, please.

Thank you very much.

Thank you. I will translate myself. Thanks, Benjamin, for taking my question. I have two quick questions. First one is, along with rising mix from NUA, traditional OEMs, their scale is declining, and this also impacts the scale of the dealer store. How does this impact our business, especially for our next generation? And the second question is, in the end of last year, we announced the dividends. How should we think about our dividend plan in the future? Thank you.

Thank you. Let me answer your question. Thank you, Brian. Although the development of new energy vehicles is relatively fast, the main focus of market sales is actually diesel vehicles. with a sales volume of less than 60%. In 2023, the fuel tank will still have a storage capacity of 3.36 billion. New Energy's storage capacity is still relatively low, which is about 20 million. So the owners of the fuel tank will still need to go through dealers and 4S stores. Of course, with the constant increase in the penetration rate of New Energy vehicles, the size of the dealers of fuel tanks Thank you for the question.

Well, talking about the market, if you look at the market, we do see the major sales were still contributed by the traditional combustion cars. And also the dealership model is still the mainstream model because 60% of the sales are still combustion cars. In 2023, for the combustion cars, there were about 336 million cars. But the renewable energy car is only about 20 million. So we do believe that to serve the roads-based market, we do still need a lot of dealers and the 4S stores. However, in terms of the future momentum, we do see that with the penetration rate of the AMV car gradually going up, we do see the shrinking of the 4S store and the dealership model would have been the future momentum, but it will not drop very sharply. So during this process, We would work together with Rust dealers and they try to transform along with Rust dealers and they try to readjust our business model.

We are also working closely with the dealers of our cream car.

Now in terms of our car's ecosystem and as well as our service system, we are also trying to work very closely with Roza combustion car dealers, and they try to work together and build a lot of our synergy.

In addition, Zhijia has also achieved good results in the field of new energy vehicles. In the past few years, the growth of new energy revenue has exceeded the growth of the market.

Now, talking about our performance in the AEV car market, we are quite promising. In terms of the revenue, our revenue growth is higher than the market average.

The development, production, marketing, sales, and sales are all part of the new car industry. The whole process is quite risky. It is also quite difficult to do every part of the process well. However, from the very beginning, Now, if you look at the EV car OEMs,

Originally, they showed the responsibilities from R&D, manufacturing, sales, marketing, and the poster sales. But the whole value chain is too long. That is quite risky to cover all the value chain. So in this way, we do see some of the NEV OEMs started to adopt a lot of dealership and a franchising model. So in this way, they have to leverage our order home, which are the vertical media, which can help them to achieve better sales. So in this, we do see that our lead business are still very promising. We have no worries about our future, especially our lead business and the future growth.

And because of its new sales characteristics, it also gives us a new opportunity. Last year, based on the characteristics of new energy vehicles, we launched a new retail business and a car-only energy space station. This new business model is an active response to market structure changes. Its business plan can effectively help new energy car brands quickly add and descend into the market channels, and bring sales increases for car companies. We expect to gradually expand the scale of future new retail business, will bring a very good income increase for Zhijia. We are also full of confidence in this new business model.

Well, actually, we also readjust our business along with this new business model and with the new characteristics. We see the new market opportunities. For example, we established our new retail business that is the auto home energy space In this way, we help Rose OEMs to get into the lower tier cities and into better channels to make their sales. This is a proactive change, trying to get more fit into this new structure of this market. And this is a brand new business model for us. It helps us to achieve a better collaboration with the NEV car brands and to enhance its sales. So we believe that in the future, if our retail, you know, business is expanding, that would bring a lot of extra revenue for all the homes. And we are very confident about this future business.

Your next question is about the shareholding. In the past few years, the company has been trying to constantly improve the shareholding. 20 years ago, we sent 20% of our annual profit to large shareholders. In 2022, we updated this policy. We paid more than 500 million yuan each year. This is equivalent to 28% of our annual profit. In 2023, we further improved this policy. At the end of last year, we announced a plan to pay 1 billion yuan. Now, talking about the dividend payout plan, in the past few years, Auto Home had always continued to providing a better return for shareholders.

Before 2021, our share actually dividend payout ratio is 20% of the net profit. Actually, in 2022, our board actually renewed the dividend payout system and the policy. We announced that we are going to pay out no less than 500 million RMB as the dividend, which equals to 28% of the net profit in that year. At the end of 2023, we further readjusted the dividend payout ratio system. We announced that we're going to make about 1 billion RMBs dividend payouts, and continuously from 2024 to 2026, for this future three years, we would provide no less than 1.5 billion RMBs dividend payouts.

So from the above review, we can see that the company has been greatly increasing the share price. It also shows that on the one hand, it shows that the company has a very good financial situation, sufficient cash reserves, and strong cash flow. On the other hand, we are also relatively rare in the entire market to be able to persist for a long time, not only to increase the share price ratio, not only to increase the share price rate, but also to repay investors.

Now, overall, if you can see that in the past few years, Auto Home had always continuously enhanced its dividend payout system and trying to provide a better return for our shareholders. On one hand, this indicates that our company has very good financial condition. We have abundant cash reservoir and a very strong cash flow. On the other hand, this also show that we have long-term commitment to providing better return to our shareholders. And this was quite rare in this market. We not only enhance the dividend payout ratio, but also push up the absolute amount of the dividend we paid out.

In the future, we will pay close attention to the market situation and market changes. At any time, we will talk to the board of directors

In the future, we will keep a close attention to the market moves and we would be in a timely manner to report and communicate with our board meetings. And we are trying to provide better returns for our shareholders.

Operator. Thank you. Our next question comes from the line of Richison from HSBC. Please go ahead.

Mr. Wu, Craig, Sterling, good evening. Thank you for accepting my question. I would like to ask about the 2024 expansion plan of the New Energy Space Station. Are we planning to expand in 30 cities? 我想问在这块我们预计2024年大概收入贡献还有在成本方面的投入会有什么计划? Thank you, management, for taking my questions. I want to ask about the energy space doors. So we plan to open to 30 more cities in 2024. So could management share what would be the revenue contribution in 2024 and how much cost will be allocated to such expansion plan? Thank you.

Thank you. We set up 20 cities in 2023. In 2024, as I mentioned in my talk, we plan to open 30 new power plants in about 30 cities. We have these power plants in 1st to 3rd and 4th-tier cities. If you pay attention, our new energy alliance is actually an alliance model. So the cost of each new electricity is limited to us. Most of it is still a way of supporting each other. We are not pursuing a size that will open very soon this year. We are still a relatively stable and healthy model. This is a new model that we are also working on. In terms of revenue, In 2023, our revenue will be concentrated in the fourth quarter, so the opening time will not be very long. The revenue will not be as large as our entire revenue. It will be about tens of millions. In 2024, the number will increase a lot, but we may not have the time to give you guidance yet. We are just saying that as the business develops, we will be able to communicate with you at any time during the process. Well, thank you for the question.

Yes, we build about 20 auto home energy-based stores in 2023. In 2024, our plan is to open 30 new stores, covering from tier one city to tier three, tier four city. Because we're providing the franchising model, so in terms of the cost, opening new stores would not drive up a lot of cost because we provide more functions, supporting functions. So that's why we didn't provide very rapid growth of these stores because we want our business to be stable, healthy, and prudent. Because this is a new business, we are still in the exploration phase. Now, talking about the revenue, If you look at the revenue, especially in Q4 of 2023, it already reached to over 10,000 of RMB. Actually, it was 16 million RMB. And we do see with more and more stores get into a maturing operating stage, that will drive up our retail revenue. And as for the future revenue growth, incurred in 2024 because it's still too early for me to provide any guidance at the current stage, but I believe that we would keep in a timely manner to communicate with you if we further generate more and more revenue in the future.

Operator?

Thank you, Deannu, for the question at this time. I'll turn the conference back to management for closing comments.

Thank you again for attending today's meeting. We look forward to the latest development of our business phone conference. If you have any questions or suggestions, please contact us at any time. Thank you.

Thank you. Thank you everyone for joining us today. We appreciate your support and we look forward to updating you in our next quarter conference call in a few minutes time. And in the meantime, if you have any further questions, please feel free to contact us. Thank you.

Goodbye. Thank you. Thank you. you

Thank you.

Ladies and gentlemen, thank you for standing by for Autohome's fourth quarter and full year 2023 earnings conference call. At this time, all participants are in the listen-only mode. A question and answer session will follow management's prepared remarks. As a reminder, this conference call is being recorded. If you have any objections, you may disconnect at this time. A live and archived webcast of the earnings conference call will also be available on Autohome's IR website. It's now my pleasure to introduce your host, Mr. Sterling Song, AutoHome IR Director. Mr. Song, please go ahead.

Thank you, operator. Thank you. Hello, everyone, and welcome to AutoHome's fourth quarter and full year 2023 earnings conference call. Earlier today, AutoHome distributed its earnings release, which can be found on the company's IR website at ir.autohome.com.cn. Joining me today on today's call are Chief Executive Officer, Ms. Tao Wu, and Chief Financial Officer, Ms. Craig Yansung. Management will go through their prepared remarks, which will be followed by a Q&A session, where they will be available to answer all 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 Education 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 filing with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange. AutoHome doesn't undertake any obligation to update any forward-looking statements except as required under applicable law. Please also know that AutoHome's earnings press release and its conference call include discussions of certain unaudited non-GAAP financial measures. A reconciliation of the non-GAAP measures for the most directly comparable GAAP measures can be found in our earnings release. I'll now turn the call over to Auto Home CEO, Mr. Wu, for opening remarks. Please go ahead, Mr. Wu.

Thank you, Sterling. Hello, everyone. This is Tao Wu, CEO of Auto Home. Thank you for joining us in our earnings conference call today. In 2023, the performance of our operations and finance will continue to improve. Innovative business will continue to lead to the overall performance of the family of cars to continue to improve. The total revenue of the whole year reached RMB 71.8 billion, which is a 3.5% increase. Online sales and other business income achieved a 14.6% increase. The net revenue ratio also increased to 30.6%. Among them, data products and day-to-day shooting continue to maintain a good rising trend. The revenue has also increased by more than 10% in two years. Zhijia's new energy business also continues to maintain a strong growth trend. The annual revenue has increased by more than 80% in the same ratio. The revenue ratio has also increased significantly to nearly 18%. In terms of profits, the whole year belongs to the economy of the home of cars. The adjusted net profit is 21.6 billion yuan. The adjusted net profit rate has reached 30.1%. In addition, we have completed a total of 200 million US dollars in stock repurchase plans over the years, and have greatly improved the share price of the shareholder. It is true that it has returned to the majority of shareholders and has further implemented the commitment to increase the shareholder return.

We delivered solid operational and financial results in 2023 with overall growth driven primarily by our new businesses. Total net revenues for the year grew by 3.5% year-over-year to 7.18 billion RMB. Revenues from the online marketplace and other businesses increased by 14.6% year-over-year and accounted for 30.6% of total revenues. Notably, we continue to see strong growth in revenues from data products and TTP, which each increased by more than 10% compared to 2022. We also saw robust growth in our NEV business, with revenues for the year increasing by over 80% year-over-year and accounting for nearly 18% of total revenues. Adjusted net income attributable to auto home for the year was 2.16 billion RMB with adjusted net margin of 30.1%. We also completed a US dollar 200 million share repurchase program and significantly increased the dividend payout to shareholders, demonstrating our commitment to generating returns for investors.

At the end of the year, we were in AI product technology. the year of the breakthrough in the field of large language model applications and model innovation. This year, we continue to launch AI-driven data products and promote the application of large language models to the entire scene of the business. The model decision-making is coordinated with artificial intelligence, which has further improved the service level of data products. Our new retail strategy is also on the ground. Many joint stores are also spreading rapidly nationwide. The layout of the car company's energy space has expanded to 20 floors, especially deeper into the underground market of the new energy track, focusing on opening up potential opportunities for low-end cities. The gradual establishment of the car company's offline channels has made the company's advantage of online capability effectively extended and expanded. At the same time, the brand influence in the new energy users has also been quickly improved,

In 2023, we made breakthroughs in the application of AI and large language models as an innovative new business model. We launched new AI-driven data products, deployed large language models in various business scenarios, and combined model-based decision-making with human expertise to enhance the service quality of our data products. We also made rapid progress in expanding our physical new retail presence. particularly in mid- to low-tier cities, where we see significant potential for growth as the NEV market evolves. Our auto home energy space doors as a strong offline channel to complement our online capabilities are now present in 20 cities across the country, helping us build brand awareness among NEV users. 汽车之家始终是中国汽车行业数字化建设和业务创新的先行者。

has been actively promoting and leading the digital transformation of the entire industry. Looking forward to the future, we will continue to maintain the leading position in these areas and create differentiated competitive advantages in four aspects. First, accelerate the promotion of the cooperation between Ping'an Group and Zhijia Group. The focus is on the construction of the car owner, the operation of the closed ring and the establishment of group resources to improve Zhijia's service capability in two directions. to create unique advantages that I have. Second, strengthen the content quality to strengthen the user's mind with professional brands. Third, use users as the center to make it more convenient for more users to be able to access, see, buy, use, change, and drive. This is a great one-stop service for the whole life cycle. Fourth, deepen the innovative business model. Autohome has always been at the forefront of digitalization and business innovation.

proactively promoting and leading the digital transformation of the entire automotive industry in China. Looking ahead, we are committed to maintaining our leadership in these key areas and creating unique advantages through the following strategies. First, we'll accelerate the collaboration with Ping An Group and focus on creating a closed-loop ecosystem for car owners and leveraging Ping An's resources to enhance our service capabilities. Second, we'll enhance the quality of our content and reinforce Autohome as the go-to brand for all things automotive, creating a strong and lasting brand image as the leading authority in this space. Third, we'll put users at the center of our efforts, providing convenient access to high-quality, comprehensive services throughout the entire car ownership lifecycle. Fourth, we'll deepen our innovative business models focusing on developing our auto home and day-to-day stores and TTP. We believe that by aggregating industry resources, leveraging Ping An's potential business opportunities and user resources, we can create a unique value proposition and establish a diverse and dynamic ecosystem that empowers our long-term growth.

Next, let's have Mr. Zeng Yan, CFO, introduce the company's four-year record in 2023 and the business and financial situation of the year.

With that, I will now turn the call over to our Chief Financial Officer, Zeng, for a closer look at our fourth quarter and full year 2023 operating and financial results. Thank you, Mr. Cao. Hello, everyone. I am Zeng Yan, Chief Financial Officer of Car Home. Thank you, Ms. Tu. Hello, everyone. I'm Craig Sun, the CEO of Alternate Home. In 2023, we will build a service system from the three levels of content, tools, and service, and provide users with a high-quality, convenient, and efficient car consumption experience. In 2023, we made user experience our core focus, creating a comprehensive system encompassing content, tools, and services to provide our users with high-quality, convenient, and efficient auto consumption experiences. to solve user pain points and speed up user decision-making. Currently, the total network exposure of this super IP is 3.25 billion, and the total network playback is more than 200 million. In addition, we have recently launched the new energy super test, which has more than two months of history, and covers the real winter use of vehicles, providing users with an objective purchase reference and using it as an opportunity to build a vehicle assessment system that is closer to the consumer's needs, drive industry development, and enhance the product and user experience of car brands. In the future, we will continue to follow the trend of user demand, and create a more diverse content ecosystem, and through more widespread dissemination, let the quality content of our home reach more users. The data of Quest Mobile shows that In the fourth quarter, we launched NEV Breakthrough Plan, a comprehensive evaluation program that assesses NEV safety across the three dimensions, collisions, batteries, and intelligent driving. This program, which aims to address user concerns and accelerate the decision-making process, has received 325 million impressions and over 200 million views across the entire network. Additionally, we launched NEV Supertest, a program which carries out real-world evaluations of NEV performance over a period of two months. This initiative gives us the opportunity to collaborate with other parties on developing a more consumer-centric vehicle evaluation system, promoting the overall NEV category, and helping automotive brands develop strong products with a better user experience. Looking ahead, we'll maintain our focus on catering to the evolving needs of users so that we can create a rich and diverse content ecosystem that provides value and drives engagement. We'll also leverage a broad range of online channels to ensure that our high-quality content reaches the widest possible audience. According to Quest Mobile, our mobile DAUs increased by 25.4% year-over-year to reach 68.9 million last December, demonstrating the effectiveness of our content-based user growth strategy. In the field of new energy, the car's energy space station has spread rapidly across the country. Through the upgrade of all-terrain brand technology and door-to-door service, we quickly completed the layout of 20 cities across the country, covering regional car consumption markets in different areas such as Huadong, Huanan, Xilan, and Hubei. Currently, the number of cooperating brands in the energy space station has gradually increased. The 3D all-in-one car model has covered more than 70 market mainstream models. We continue to increase the number of companies This is an investment in the new retail model that digitizes multi-brands into features. In 2024, we plan to continue to open joint stores in about 30 cities. By the end of this year, the overall new energy car service ecosystem will penetrate about 50 cities, covering more extensive areas and reaching more levels of cities in depth. Our NED business has grown rapidly with the expansion of auto home energy space to 20 cities across the country. We've upgraded our brand technology and store services to provide a high-quality consumer experience across regional auto markets in East, South, Southwest, and North China. We've also increased the number of energy space brand partners and expanded our offering of 3D holographic car models to include over 70 mainstream models. We remain optimistic about the potential of this new retail model. which is distinguished by its cross-brand and digital approach. Looking ahead to 2024, we plan to fully expand our footprint by opening franchise stores in around 30 additional cities. By the end of this year, our NEV service ecosystem will have a presence in around 50 cities, allowing us to provide a comprehensive range of high-quality one-stop automotive service experiences to consumers across the country. For full year 2023, our revenue from NEB brands increased 81.6%, demonstrating the strength of our offerings in this area and our ability to outperform industry sales growth rates. In terms of digitalization, 2023 is the year when our AI technology and large language model are scaled to promote applications. Based on AI technology and big data capabilities, we launched YunzhiXuan, QiXin, and other products. to help marketers reach high-quality users at different levels and support the needs of planning and processing in different business scenarios. Based on the language model, we have launched a multi-business scenario application that covers products such as AIGC, business managers, and other products. Through digitized operation, it helps merchants to increase their profits. In the past two or three years, the number of e-commerce revenue and e-cooperation products of digitalized marketers has increased by more than 20%. We also made significant progress. in our digitalization efforts in 2023 as we applied AI technology and large language models across a wide range of products and services. We launched products such as Cloud Smart Selection and Qi Xin Tong, which leverages our AI technology and big data capabilities to help dealers engage with high-value users and manage instant messages with users in different scenarios. We also introduced applications based on large language models, such as AIPC and Operation Butler, helping our dealer customer reduce overall costs and increase efficiency. In 2023, the average revenue for data products to dealer store and the average number of data products adopted by each dealer store both grew by over 20% compared to the prior year, as the number of dealer customers for data products continued to ramp up. driving a 38% year-over-year increase in dealer data revenue for the year. We expect our digital products to maintain their strong growth momentum, contributing to a more diversified revenue mix for auto-haul. In the second-hand car industry, on the one hand, we surround the second-hand car business scene, provide rich product combinations to second-hand car dealers, making their daily business management more intelligent. For example, the first station is the vehicle frame and vehicle frame survey platform, which provides convenience for second-hand car dealers to survey the vehicle frame and vehicle volume and receive good feedback. We also launched the second-hand car version of the car dealership to provide comprehensive information management services to the dealers. On the other hand, by establishing a new retail store, Zhentian Pai Che also quickly realized its business. In 2023, Zhentian Pai Che's revenue has increased by more than 10%. In terms of our used car business, we offer a wide range of products to help used car dealers manage their daily business operations more efficiently. For example, our one-stop platform for vehicle condition and price inquiries provides a convenient way for dealers to access relevant information and has received positive feedback. We've also launched a membership product specifically designed for used cars, providing dealers with a comprehensive information management platform. On the other hand, we have successfully expanded TTP's business through new retail stores. In 2023, TTP delivered a year-over-year revenue growth of over 10%. Overall, the revenue growth of TTP has been stable for two or three years. The revenue structure continues to optimize. The flow of users is growing steadily. New sales business is entering a fast-growing period. The overall business is steadily moving forward step by step. Looking forward to the future, we will continue to firmly invest in new models, new technologies, and new products, and actively explore the deep co-operation opportunities of Ping'an Group in business, resources, and the user field to achieve the next stage of growth and continue the new dynamic. We have steadily grown revenue while achieving a more optimal revenue mix and driving a significant increase in user traffic. Our new retail business is growing rapidly and our overall business is making steady progress. Looking ahead, we will continue to invest in new models, technologies, and products, and proactively explore opportunities for further business, resource, and user synergies with Ping An Group. Through this effort, we aim to create new growth momentum and position ourselves for continued success in the future. Next, I would like to explain to you the fourth quarter of 2023 and the main financial situation of the year. Please note that I will only use RMB as a currency unit in today's discussion, unless there is another explanation. Let me walk you through the key financials for the fourth quarter and full year 2023. Please note that, as with prior course, I will reference RMB only in my discussion today, unless otherwise stated. The net revenues for the fourth quarter were $1.91 billion. Breaking down by segment, media services revenues were $500 million, leads generation services revenue were $841 million, and the online marketplace and others revenues were $569 million, up 14.8% year-over-year. In terms of cost, In the fourth quarter, the operating cost was 3.68 billion yuan. In the second quarter, the same period was 3.7 billion yuan. In the fourth quarter, the interest rate was 80.8%. In the second quarter, the same period was 80.4%. Moving on to cost, cost of revenues in the fourth quarter was 368 million compared to 371 million in Q4 2022. Gross margin in the fourth quarter was 80.8%. compared to 80.4% in Q4 2022. 营业费用方面, 第四季度销售及市场费用为7.3亿元, R2年同期为6.73亿元, 研发费用为3.56亿元, R2年同期为3.13亿元, 最后一般及管理费用为1.57亿元, R2年同期为1.03亿元, Turning to operating expenses, sales and marketing expenses in the fourth quarter were $730 million compared to $633 million in Q4 2022. Product and development expenses were $356 million compared to $330 million in Q4 2022. Finally, general and administrative expenses were $157 million compared to $103 million in Q4 2022. In total, the sales profit of the fourth quarter of Car Home was $3.67 billion, and the same period of 2012 was $5.13 billion. The net sales profit of Car Home was $5.03 billion, and the same period of 2012 was $6.69 billion. Overall, we delivered operating profits of $367 million in the fourth quarter compared to $513 million in the corresponding period of 2022. Adjusted net income attributable to auto home was $503 million in the fourth quarter compared to $669 million in the corresponding period of 2022. In the fourth quarter, we adjusted the basic and In the fourth quarter, the net adjustment basis and the US stock stock margin of profit were divided into 4.15 yuan and 4.14 yuan. In the same period of 2022, they were divided into 5.42 yuan and 5.11 yuan. Nanogap-based and diluted earnings per share in the first quarter were both 1.04 compared to 1.36 and 1.35, respectively, in the compounding period of 2022. Non-GAAP basic undiluted earnings per ADI in the first quarter were 4.15 and 4.14 respectively, compared to 5.42 and 5.41 respectively in the corresponding period of 2022. Next, I will summarize the performance of our 23 years. The total income is 71.8 billion yuan, which is a 3.5% increase. Let me now turn to a short summary of our year 2023 full year results. Total revenues were $7.18 billion, an increase of 3.5% year-over-year. Of that, media services revenue were $1.87 billion, leads generation services revenue were $3.11 billion, and the online marketplace and other business revenue increased by 14.6% year-over-year to $2.2 billion. In addition, we delivered an adjusted net income attributable to auto home of 2.16 billion with adjusted net margin of 30.1%. As of December 31, 2023, Our balance sheet remained very strong with cash, cash equivalents and short-term investments of $23.55 billion. We generated net operating cash flow of $2.45 billion in 2023. In November 2021, the board of directors approved a stock return plan of less than $200 million in 12 months. In November 2022, In November 2021, our board of directors authorized a share repurchase program under which we were permitted to repurchase up to US$200 million of Autohomes ADS. for a period not exceed 12 months thereafter. In November 2022, our board of directors authorized an extension of this share repurchase program for another 12 months. As of December 31st, 2023, we have completed this share repurchase program with repurchase approximately 6.73 million ABS for a total cost of approximately US dollar 200 million. This is the end of the financial data meeting. Next, we will start answering questions. With that, now we are ready to take your questions. Operator, please open the line for Q&A session.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 11 on your telephone and wait for your name to be announced. If you would like to cancel your request, please press the pound or hash key. Once again, to ask questions, please press star 11. The first question comes from the line of Thomas Chong from Jefferies. Please go ahead.

Thanks, management, for taking my questions. My question is about the industry outlook. Can management comment about the 2023 industry performance and how we should think about the trend and the outlook in 2024 as well as the opportunities ahead? Thank you.

First, thank you for your question. In 2023, we also saw that the domestic automotive industry generally experienced such a trend of before low and after high. The sales of the whole year also created a historical high. According to the statistics of the National City Union, the sales of the four-season hot pot car market has recovered relatively well, and the sales of retail have increased by 13.8%. It is 1.4% higher than in the third quarter. It should be a significant improvement. This is mainly due to the near end of the year. All over the country, there are also sales activities. Through offline car shows, sending consumer vouchers, etc. There are many ways to save money. In addition to a small batch of this fuel car, the state-owned car type of light warehouse has achieved an effective increase in annual sales. In 2023, the whole year, The sales of commercial vehicles have increased by 5.3%. The main growth comes from new energy vehicles.

Thank you very much for the question. Actually, in 2023, we do see the trend of the first low and then high momentum in the auto market in China. In terms of 2023, the sales volume hit historical high. According to the statistics of the CPCA, in Q4, we do see a quick recovery in auto sales. especially for the retail sales, had gone up by 13.8% year over year, and quarter over quarter for the third quarter, it was up 1.4%. That is because close to the end of the year, there are a lot of promotions nationwide, For example, the offline auto show and providing consumption vouchers and coupons for car purchasing and some of the stock for the combustion cars, which failed to meet the national standards. And also, in this way, it boosted the sales. As for 2023, the passenger car sales have gone up by 5.3%, majorly due to the SUV cars.

At the same time, we also see that the industry is facing a relatively serious challenge. All year round, we are in the middle of the price roll, and the profits are in the long-term pressure. According to the data announced by the National Youth Association, in 2023, the total annual income of the automotive industry increased by 12%, and the profitability was only 5%. Compared to the profitability of the entire industrial enterprise, which is 5.8% of the average level, the automotive industry is still low. We also see some challenges in this industry. For example, it's very competitive in starting the price wars and the margins have been squeezed. According to the data published by CPCA,

For 2023, the whole auto industry, especially the revenue, has gone up by 12%. However, the margin is only 5%. Compared with the overall industrial corporates margin, which was 5.8%, the auto market margin is quite low. So in this way, according to the data of CADA, for the first half of 2023, there were 50.3% of the dealers suffered loss. And it's quite challenging for the 4S stores.

In 2024, we still believe that the car industry as a citizen's support industry will continue to be valued by the country and the government. In the beginning of the year, many local governments also issued policies to promote the purchase of cars. For example, in early January, Guangzhou held the New Village Tour to purchase cars. Now looking into 2024,

We firmly believe that the auto market will be a pillar industry for the national economy. It will be continuously supported by the government, especially at the beginning of 2024. We do see a lot of local governments extended and initiated a lot of supportive policy to stimulate the purchasing of the car. For example, in January, Guangzhou launched the subsidy for purchasing cars during the new spring. And in Zhengzhou, they also issued consumption coupons for car purchasers. So this would help to stimulate the market demand and also help to drive up the sales in the auto market. According to CPCA, in 2024, the auto market will continue to stabilize and will continue to provide a good development momentum, which will achieve 3% of the growth.

Finally, from the structure of the automotive market, new energy has continued to grow rapidly. The market penetration rate has increased from 28% in 2022 to about 35% in 2023. It is expected to reach about 40% in 2024. As the penetration rate of new energy vehicles continues to increase, users' purchasing minds are also changing. The competition for traditional fuel vehicles will be more intense. From the strategy of each vehicle, whether autonomous or integrated traditional vehicles, they have begun to explore new energy vehicles and launch new energy vehicle development plans. This will also lead to continuous changes in vehicles,

Finally, in terms of the structure of the auto market, NUV has always kept growing in a rapid way. The penetration rate of the NUV has gone up from 28% back in 2022 to 35% in 2023. It will be expected to reach 40% in 2024. With the higher penetration rate, we do see some momentum change for the purchasers. And we believe that the competition in the traditional combustion car market will be even more aggressive. So we do see that no matter it's the domestic brands or the JV brands, a lot of the traditional car makers are trying to explore to launch a lot of NUV car models to fit into the NUV gross market. That would also help the OEM to try to be more innovative to enhance its competency to fit into this market.

In general, we believe that with more and more supporting policies to be released,

This would further stimulate this market and regenerate the consumption vitality. We are quite confident in 2024's auto market in China.

Thank you.

Thank you for the questions. One moment for the next question. Next question, we have the line from Xiao Dan Zhang from CICC. Please go ahead.

Thank you for accepting my question. I have two questions. The first is that I see that the overall interest rate and operating profit rate of the first two or three years have actually decreased. Can you please introduce what our investment plan for cost and fee in 2024 is like? How do we look at the future trend of this profit rate? So thanks management for taking my questions and I got two questions here. So first of all, we have noticed that the growth margin and operating profit margin declined year-on-year in 2003. So what's your expectation for the margin trend in Q1 2024 and onwards? And secondly, could you please elaborate on your strategies for enhancing the synergies between Auto Home and Pion Group? Thank you.

Thank you. First of all, I would like to answer a question about the trend of interest rate and operating profit. In 2023, our net profit rate will be slightly lower than in 2022. In general, in terms of cost and cost, we are considering a diversified ecosystem. Our business model and the past have changed a bit. First of all, in terms of user operations, we have also increased the investment in the user's heart and vitality. At the same time, because of the opening of our new energy store last year, we also provided some early activity subsidies. It will also provide some support to the homeowner. Flow support, various commercial resources, and related training will also attract local consumers to try out. From the content, the entire industry now has higher and higher requirements for content. We will also include some targeted content. At the same time, we have also increased the investment in video and live content other than text. There is also a certain increase in cost.

Well, thank you very much for the question. Now talking about the GP margin, well, yes, in 2023, compared with 2020 or 2023, compared with 2022, we do see some slightly down in the GP margin. Well, now talking about the cost, we have provided more diversified content ecosystem. So that's why it drives up some of the cost. In terms of the user experience, we have enhanced the recruiting of the new customers and the promotions. In this way, we also expanded about 20 renewable energy and EVs offline experience stores. And we provided some promotion subsidies, and we also offered a lot of support for the dealers. So in this way, we provided also training and a lot of other resources to attract the local consumers to come to the store to do the test drive and to boost the car sales. Now, in terms of the content, we have invested more and more in high-quality content, not only the text and the picture-based. We also invested in video and the live streaming. So in this way, it drives up some of the costs.

In terms of cost, we have also increased our investment in events such as the 818 World Car Festival and the 618 New Energy Car Festival, as well as in some cloud car exhibitions. We also have some high-quality IPs, such as our original New Energy Breakthrough Plan and New Energy Super Test, and other professional assessments. In general, In this new environment, everyone's demand for content needs to be more professional and more unique. So overall, the investment in these areas has increased. In terms of the trend of profit, we think that overall, the current challenges of profit in the entire industry are very big. And Zhijia should be able to face some challenges on a relatively stable basis. We will still put Now, in terms of the cost and expenses, we have enhanced some marketing

For example, we launched the 818 auto show, global auto show, and also online auto show, etc. And also, we invested more heavily in high-quality IP. For example, we have initiated the NUV breakthrough plan and NUV super test. So in this way, we are providing more professional content. So we are focusing on providing professionalism and unique content. Now, in terms of the momentum of the profit, we do see that the whole industry is under stress and is receiving a lot of challenges. But auto home has always been quite stable in terms of the profit, although we are facing with some challenges. But if we can strictly control the cost and expenses, and we would enhance efficiency as a long-term goal. We believe we can achieve a good balance.

Okay. Let me answer the second question, which is about the collaboration between Zhijia and Ping'an. Zhijia and Ping'an have their own resources and advantages. Zhijia has nearly 70 million DLU users and has professional and interesting vehicle content. There is also a rich experience of being able to meet the needs of C-end users and serve B-end customers at the same time. And Ping'an Transport provides insurance for nearly 60 million car owners. Ping'an Transport's car owner platform has 200 million registered car owner users. Both companies are an important part of the car ecosystem. Both sides are also focused on connecting B-end service cooperation partners to provide customers with a cost-saving and money-saving ultimate service experience for C-end users and customers. In the future, the cooperation between the two parties will certainly play an advantage in each other's fields. Zhuo Li opens up online and offline channel resources to create a complete closed loop that looks at cars, buys cars, uses cars, and exchanges cars.

Now, talking about the second question, which is about the synergy between Odohome and the Ping An Group. Now, I want to make the comments. So, first of all, Odohome and Ping An Group, each of them have its own unique characteristics as well as resources. And we can make our business quite complementary to each other. For example, Odohome has a lot of traffic. We have about 70 million DAUs. every day and we have professional content and tools. We have very enriched 2C and 2B services and experiences. For Ping An Group, they have about 60 million car owners which are their insurance customers and in their platform there are about 200 million registered customers. So they also have a lot of enriched 2C and 2C services and experiences. So in terms of the service quality, we believe that each of us can play the merits of our strengths, and we can provide the online plus offline seamlessly connection, and also providing the car owners for shopping the car, using the car, and the posted sales of the car services to create the closed-loop ecosystem for the car users.

To be specific, currently, we are also exploring some of the capabilities of both tools, content, and services, and the user scenarios and customer contact channels of both sides. In fact, through integrated resources, 2C and 2B can achieve 1 plus 1 greater than 2, and improve the overall, and also improve our home, such a leading product. We will become the world's leading 2B and 2C content ecosystem, plus tools and services, plus trading platforms, and provide a war-like car life service.

In terms of the tools, content, and the services, we believe that we can create a lot of synergy. We can consolidate a lot of resources to create the one plus one is higher and more than two effect. So in this way, we believe that our two companies are quite complementary to each other. And in this way, Autohome will leverage on the resource of Peon Group and to enhance our investment yield and to enhance efficiency and try to build our vision and make our vision, you know, realizing our vision. We want to be the first-class international to-be and to-see content provider, the tools and the service provider, and we want to be the unified, you know, auto purchasing and the auto sales service platform.

Thank you, operator. Please go ahead.

Thank you. Your next question comes from the line of Brian Kong from Citi. One moment, please.

Thank you very much.

I will translate myself. Thanks, Benjamin, for taking my question. I have two quick questions. First one is, along with rising mix from NUA, traditional OEMs, their scale is declining, and this also impacts the scale of the dealer store. How does this impact our business, especially for our next generation? And the second question is, in the end of last year, we announced dividends. How should we think about our dividend plan in the future? Thank you.

Thank you. Let me answer your question. Thank you, Brian. Now, although the development of new energy vehicles is relatively fast, But in terms of market sales, it's still fuel-powered vehicles. The sales of fuel-powered vehicles are still lower than 60%. In 2023, the fuel-powered vehicles will still have a storage capacity of 3.36 billion. New Energy's storage capacity is still relatively low, at around 20 million. So the owners of these fuel-powered vehicles will still need to go through manufacturers and 4S stores. Of course, with the constant increase in the penetration rate of new energy vehicles, Thank you for the question.

Well, talking about the market, if you look at the market, we do see the major sales were still contributed by the traditional combustion cars. And also the dealership model is still the mainstream model because 60% of the sales are still combustion cars. In 2023, for the combustion cars, there were about 336 million cars. But the renewable energy car is only about 20 million. So we do believe that to serve the roads-based market, we do still need a lot of dealers and the 4S stores. However, in terms of the future momentum, we do see that with the penetration rate of the AMV car gradually going up, we do see the shrinking of the 4S store and the dealership model would have been the future momentum, but it will not drop very sharply. So during this process, We would work together with REST dealers and they try to transform along with REST dealers and they try to readjust our business model. Now, in terms of our car's ecosystem and as well as our service system, we are also trying to work very closely with RELSA combustion car dealers, and they try to work together and build a lot of our synergy.

In addition, Zhijia has also achieved good results in the field of new energy vehicles. In the past few years, the growth of new energy revenue has exceeded the growth rate of the market.

Now, talking about our performance in the AEV car market, we are quite promising. In terms of the revenue, our revenue growth is higher than the market average.

From the beginning, we have been in charge of all the stages of development, production, marketing, sales, and sales. The whole process is quite risky. It is also quite difficult to do every stage well. However, from the very beginning, Now, if you look at the EV car OEMs,

Originally, they showed the responsibilities from R&D, manufacturing, sales, marketing, and the poster sales. But the whole value chain is too long. That is quite risky to cover all the value chain. So in this way, we do see some of the OEMs started to adopt a lot of dealership and the franchising model. So in this way, they have to leverage our order home, which are the vertical media, which can help them to achieve better sales. So in this, we do see that our lead business are still very promising. We have no worries about our future, especially our lead business and the future growth.

And because of its new characteristics of production and sales, it also gives us a new opportunity. Last year, based on the characteristics of new energy vehicles, we launched a new retail business and a car-only energy space station. This new business model is an active response to the change in market structure. Its business plan can effectively help new energy car brands quickly replenish and sink into the market channels, and bring sales increases for car companies. We expect to gradually expand the scale of future new retail business. will bring a very good amount of revenue to the family. We are also full of confidence in this new business model.

Well, actually, we also readjust our business along with this new business model and with the new characteristics. We see the new market opportunities. For example, we established our new retail business that is the auto home energy space In this way, we help Rose OEMs to get into the lower tier cities and into better channels to make their sales. This is a proactive change, trying to get more fit into this new structure of this market. And this is a brand new business model for us. It'll help us to achieve a better collaboration with the NEV car brands and to enhance its sales. So we believe that in the future, If our retail, you know, business is expanding, that would bring a lot of extra revenue for all the homes. And we are very confident about this future business.

Your next question is about the distribution and distribution of shares. In the past few years, the company has been trying to constantly improve the shareholder's return. Two years ago, we sent 20% of our annual profit as shares to major shareholders. In 2022, we updated this policy. We will allocate more than 500 million yuan per year. This is equivalent to 28% of the net profit of that year. In 2023, we will further improve this policy. At the end of last year, we announced a plan to allocate 1 billion yuan per capita. In 2023, we will allocate 1.5 billion yuan per capita. Now, talking about the dividend payout plan, in the past few years, Auto Home had always continued to providing a better return for shareholders.

Before 2021, our share actually dividend payout ratio is 20% of the net profit. Actually in 2022, our board actually renewed the dividend payout system and the policy. We announced that we are going to pay out no less than 500 million RMB as the dividend, which equals to 28% of the net profit in that year. At the end of 2023, we further readjusted the dividend payouts ratio system. We announced that we're going to make about 1 billion RMBs dividend payouts, and continuously from 2024 to 2026, for this future three years, we would provide no less than 1.5 billion RMBs dividend payouts.

So from the above review, we can see that the company has been greatly increasing the share price. It also shows that on the one hand, it shows that the company has a very good financial situation, sufficient cash reserves, and strong cash flow. On the other hand, we are also relatively rare in the entire market to be able to persist for a long time, not only to increase the share price ratio, not only to increase the share price rate, but also to reward investors.

Now, overall, if you can see that in the past few years, Auto Home had always continuously enhanced its dividend payout system and trying to provide a better return for our shareholders. On one hand, this indicates that our company has very good financial condition. We have abundant cash reservoir and a very strong cash flow. On the other hand, this also shows that we have long-term commitment to providing better return to our shareholders. And this was quite rare in this market. We not only enhance the dividend payout ratio, but also push up the absolute amount of the dividend we paid out.

In the future, we will closely monitor the market situation and market changes. At any time, we will discuss with the board of directors

In the future, we will keep a close attention to the market moves and we would be in a timely manner to report and communicate with our board meetings. And we are trying to provide better returns for our shareholders.

Thank you. Our next question comes from the line of Richardson from HSBC. Please go ahead.

Mr. Wu, Mr. Craig, Mr. Sterling, good evening. Thank you for accepting my question. I would like to ask about the 2024 expansion plan of the New Energy Space Station. Are we planning to expand in 30 cities? 我想问在这块我们预计2024年大概收入贡献还有在重本方面的投入会有什么计划? Thank you, management, for taking my questions. I want to ask about the energy space doors. So we plan to open to 30 more cities in 2024. So could management share what would be the revenue contribution in 2024 and how much cost will be allocated to such expansion plan? Thank you.

Thank you. According to the New Energy Space Station, we have set up 20 cities in 2023. In 2024, as I mentioned in my talk, we are expected to open a new power plant in about 30 cities. We basically have these power plants in 1st to 3rd and 4th-tier cities. If you pay attention, our New Energy Power Plant is actually a collaborative model. The cost of each new store is limited to us. We are more of a support system. We are not pursuing a very fast opening of stores this year. We are more of a stable and healthy model. This is a new model that we are exploring. In terms of revenue, in 2020, In the fourth quarter of 2023, the revenue will be concentrated on power generation, so the time for power generation will not be long. The overall revenue will be less than that of the entire industry. It will be about 10 million yuan. In 2024, the number will increase a lot, but we may not have the time to give guidance yet. As the business develops, we will be able to communicate with you at any time during the development process to provide you with more information on revenue.

Well, thank you for the question. Yes, we build about 20 auto home energy-based stores in 2023. In 2024, our plan is to open 30 new stores, covering from tier one city to tier three, tier four city. Because we're providing the franchising model, so in terms of the cost, opening new stores would not drive up a lot of cost because we provide more functions, supporting functions. So that's why we didn't provide very rapid growth of these stores, because we want our business to be stable, healthy, and prudent. Because this is a new business, we are still in the exploration phase. Now, talking about the revenue, if you look at the revenue, especially in Q4 of 2023, it already reached over 10,000 of RMB. Well, actually, it was 16 million RMB. And we do see with more and more stores get into a maturing operating stage, that will drive up our retail revenue. And as for the future revenue incurred in 2024, because it's still too early for me to provide any guidance at the current stage, but I believe that we would keep in a timely manner to communicate with you if we further generate more and more revenue in the future.

Operator.

Thank you, Daniel, for the question at this time. I'll turn the conference back to management for closing comments.

Thank you. Thank you everyone for joining us today. We appreciate your support and we look forward to updating you in our next quarter conference call in a few minutes time. And in the meantime, if you have any further questions, please feel free to contact us. Thank you. Goodbye.