Autohome Inc.

Ladies and gentlemen, thank you for standing by for Autohome's first quarter 2024 earnings conference call. At this time, all participants are in 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 this earnings conference call will also be available on AutoHomes IR website. It is now my pleasure to introduce your host, Sterling Sung, AutoHomes IR director. Mr. Sung, please go ahead.

Thank you. Thank you, operator. Hello, everyone, and welcome to AutoHomes first quarter 2024 earnings conference call. Earlier today, AutoHomes 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 Yanzeng. Management will go through their prepared remarks first, which will be followed by a Q&A session, where they will be available to answer your questions. Before we continue, Please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the U.S. private Security 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 not limited to those outlined in our public 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 laws. Please also note that AutoHome's earnings press release and base conference call include discussions of certain unaudited non-GAAP financial measures. The reconciliation of the non-GAAP measures to the most directly comparable gap measures can be found in our earnings release. I'll now turn the call over to Auto Home CEO, Mr. Tao Wu, for opening remarks. Please go ahead, Mr. Wu.

TAO WU, CEO of Auto Home CEO of Auto Home Thank you, Sterling.

Hello, everyone. This is Tao Wu, CEO of Auto Home. Thank you for joining our earnings conference call today.

I am very happy to report to you that the performance performance of the first quarter of the family of automakers is still stable. The total revenue has reached RMB16.1 billion, a 4.9% increase. Online sales and other business income have continued to achieve a double increase of 13%. The net profit ratio was 34.5%, which was quickly improved by the promotion of smart products and data products. It increased by more than 10% in the same period of 23 years. New energy businesses also continued to maintain a strong growth trend. The net profit ratio reached 49.6%. In terms of profits, the first quarter belonged to the company's I'm pleased to report a solid start to the year with total revenues growing by 4.9% year-over-year to 1.61 billion RMB. Revenues from the online marketplace and others continue to achieve double-digit growth

increasing by 17% year-over-year, rising to 34.5% of total revenues. Notably, we continue to see strong growth in revenues from our data products, which increased over 10% in the quarter from a year earlier, driven primarily by our smart series products. We also saw robust growth in our AEB business, with revenues for the quarter increasing by 49.6% year-over-year. Adjusted net income attributable to auto home quarter was up 2.2% year-over-year to 494 million RMB, while our adjusted net profit margin remained at a relatively high level of 30.7%.

In the field of innovative business, with the opening and operation of the roadside of the car home space station, our influence has gradually penetrated into the wider car area consumer market, effectively promoting the online and offline integrated development of home businesses. We have further intensified our cooperation with Ping'an Group, allowing consumers to enjoy a more secure, relaxed and convenient service experience. For our innovative business, as new franchise stores are on track to open, our old home space will expand further into a broader geographic area, driving the development of our online and offline integration.

We also further strengthened our collaboration with Ping An Group through providing consumers with greater peace of mind and a more convenient user experience. In addition, we actively responded to the national trade-in for new policy, launching a series of initiatives such as the 100 cities trade-in for new car buying festival in collaboration with Ping An Group, allowing consumers to enjoy even more benefits.

Looking forward to the future, we will continue to uphold the spirit of professionalism and continue to promote innovation to meet the needs of users and customers with better and more convenient products and services. At the same time, we will continue to work hard to perfect and optimize the overall business structure of the company, ensuring that both traditional and new industries can achieve sustainable development. Looking forward we are committed to maintaining our professionalism and expertise

We are driving continuous innovation and offering even more convenient and high-quality products and professional services to our users and clients. Meanwhile, we will continue to refine, improve, and optimize our overall business framework to ensure sustainable development in both traditional and emerging sectors. Additionally, we will fully leverage the Ping An Group's vast resources to explore and develop opportunities in various areas, including automotive ecosystems, big data, cooperative car ownership services, and user benefits. Together, we will develop even greater synergies and push forward with new business initiatives.

Next, I would like to invite Mr. Zeng Yan, CFO, to introduce the business and financial situation of the first quarter of 2020.

With that, I will now turn the call over to our CFO, Greg Sun, for a closer look at our first quarter 2024 operating and financial results. Thank you, Mr. Wu. Hello, everyone. I'm Greg Sun, the Chief Financial Officer of Auto Home.

In the first quarter, we continue to focus on the advantageous content, practical tools, and high-quality services, and create the influence of a car brand. In March, we encouraged new car models to be on the market, launched the original new car content IP, and launched the live broadcast on the eight major online platforms. With the fastest speed, the best time and the deepest analysis, we brought the users a new professional content experience, and gained a good reputation among users and customers.

In the first quarter, we continue to focus on developing high-quality content, practical tools, and premium services to enhance Autohome's brand influence. In March, amid a flurry of new car launches, we introduced our original IP content, SoFastSoTest, forecasting on eight major online platforms. By offering comprehensive real-world testing and in-depth analysis of the latest models, we provided a fresh content experience that has received widespread positive feedback from both users and clients. This new content tallies more than 500 million exposures across all platforms, significantly enhancing Autohome's influence.

In addition, due to the frequent fluctuation of car price, we have also launched price and price tools. First, it allows users to see the vehicle's verification trend directly, and then further enriches the vehicle comparison degree, enhance the comparison effect, and make the purchase decision process of the user more efficient and convenient. FACMobile's data shows that

In addition, in response to escalating price competition and frequent fluctuations in vehicle pricing, we introduced a number of innovative tools, including a price trend tracker and a comprehensive model comparison tool. The former enables users to intuitively see pricing trends, while the latter provides enhanced detailed comparisons to improve the comparison and decision-making process. According to Quest Mobile, average mobile BAUs reached 69.39 million in March, an increase of 8.1% from a year earlier, which clearly demonstrates the effectiveness of our content-focused strategy for user growth.

In the energy sector, the vehicle space station has made a significant progress in the layout, covering not only the core cities of North, Shang, Guang, Chongqing, Chengdu, etc., but also the important second-tier provincial councils such as Kunming, Guiyang, Jinan, etc. and further down to Le Shan, Zhaoqing, Qingyuan, and other three or four-line cities with potential to cover a wide range of cities. In the first quarter, we also authorized nine city partnerships. These city partnerships will be launched continuously within the next two or four years, which will greatly promote the expansion of our new energy car service ecosystem to low-end cities. Turning to NEV, Autohome Space continues to make significant progress.

Autohome Space is not only present in major cities, including Beijing, Shanghai, Guangzhou, Chongqing and Chengdu, but has also expanded into key second-tier provincial capital cities, including Kunming, Guiyang, and Jinan, etc., as well as promising third- and fourth-tier cities like Leshan, Zhaoqing, and Qingyuan, etc., reaching broad market coverage. During the quarter, we also granted franchise drives to partners in nine additional cities where stores are on track to open later this year. This expansion will significantly enhance the presence and reach of our AEV services geographically, expanding our reach to additional users.

On the other hand, the space station itself, as an effective base for marketing services, has unique advantage resources and strong digitalization efforts. We will make full use of these advantages to provide a comprehensive marketing solution solution Currently, our 3D all-wheel drive model covers more than 80 mainstream new energy vehicles in the market. In the first quarter, our new retail business cooperation brand has more than 30 new car launches, test drives, test drives, and comparison test drives, and more than 100 sales activities. In addition, Zhijia's income from new energy brands in the first quarter has increased by 49.6% and continues to run the sales rate of the industry.

Our own home space doors also function as an effective marketing platform equipped with substantial online and offline resources as well as advanced digital capabilities. Leveraging these advantages, we can provide OEMs with integrated one-stop marketing solutions. Currently, our 3D holographic car models cover more than 80 mainstream NEV models in the market. In the first quarter, Our new retail business collaborated with more than 30 brands, launching over 100 marketing events, including new car launches, test drives, and a driving comparison. Revenues from NEB brands in the first quarter of this year increased by 49.6% from a year earlier, consistently outpacing industry growth rate.

In the digital field, we continue to strive to drive the in-depth use and landing of large language models. We have gradually transformed the original dialogue robot based on the strategy into a car industry customized large-scale model, applied to AI outsourcing, service dialogue, sales, content production, creation, and other scenarios, thereby significantly improving the quality and efficiency of original data products. This approach not only improves product performance, but also helps us effectively expand the coverage range of our customers.

For digital products, we are committed to applying large language models, or LLMs, more widely across our business. We are gradually replacing existing strategy-based chatbots with customized LLMs that are tailored to the automotive industry. These LLMs are now being used for AI's outbound calls, customer services, and the creation of marketing content, significantly enhancing the quality and efficiency of our existing data products. This initiative not only refines our product performance, but also expands the coverage of our clients. In the first quarter, the number of dealers that purchase our data products continue to increase, driving revenue growth of 27% year-over-year for dealer data products.

We also apply our digitalization capabilities to the second-hand car industry to create a transparent and reliable trading environment. For example, at the user's end, we provide car mining comprehensive survey tools to help users restore real car mines and recruit high-quality drivers. At the customer's end, We have also applied our digital capabilities to the used car business,

creating a transparent and trustworthy buying environment. For instance, for consumers, we provide a comprehensive set of tools to verify true vehicle conditions to help buyers accurately assess a vehicle and select quality cars options. For dealerships, we offer a broad range of tools, including price and vehicle condition checks, as well as digital marketing solutions to help them improve operational efficiency. In the first quarter, the number of dealerships that queried our one-stop vehicle condition and pricing platform saw a year-over-year increase of more than 80%, reflecting dealerships' recognition of Autohome's expertise.

As mentioned above, the performance of the car industry has steadily developed. Revenue and profits have all achieved the same growth. Digitalization and new energy business are rapidly developing. Continuous promotion of the overall business In summary,

Autohome achieved steady growth in revenue and profit in the first quarter this year, driven by the rapid development of our digital products and the NEV businesses. Additionally, the introduction, replication, and interactive updates to our new innovative business models are increasingly contributing, diversifying, and optimizing our revenue mix. We will continue to explore new businesses, leverage Ping An Group's unique advantages, discover new opportunities to collaborate and promote the sustained and healthy development of auto-home.

Next, I will explain the main financial situation of car owners in the first quarter of 2024. Please note that I will only use RMB as a currency unit in today's discussion unless there is another explanation.

Let me briefly walk you through the key financials for the first quarter of 2024. Please note that, as with the prior course, our references are only in my discussion today unless otherwise stated.

The total revenue of the first quarter is 16.1 billion yuan. In summary, the total revenue of the media service is 3.27 billion yuan. The total revenue of the online service is 7.26 billion yuan. The total revenue of the online marketing and other services is 5.55 billion yuan.

Net revenues for the first quarter were $1.61 billion, breaking it down by segments. Media services revenues were $327 million. Least generation services revenues were $726 million. And online marketplace and others revenues were $555 million, up 13% year over year.

Cost of revenues in the first quarter was $301 million compared to $340 million in the first quarter of 2023. Gross margin in the first quarter was 81.3%

compared to 77.8% during the same period last year. Turning to operating expenses, Sales and marketing expenses in the first quarter were 641 million compared to 523 million in the first quarter of 2023. Product and development expenses were 336 million compared to 324 million in the first quarter of 2023. Finally, general and administrative expenses were 150 million compared to 149 million during the same period

Overall, we delivered an operating profit of $276 million in the first quarter.

compared to $263 million in the corresponding period of 2023. Adjusted net income attributable to auto home was $494 million in the first quarter, compared to $484 million in the corresponding period of 2023.

In the first quarter, the adjusted basic income and the annual income of each group in Hamburg was $1.02, and the annual income of the same period was $0.98. Non-GAAP basic and diluted earnings per share in the first quarter were 1.02% up from 0.98% in the corresponding period of 2023.

Non-GAAP basic and diluted earnings per ABS in the first quarter were 4.08 and 4.07, respectively, compared to 3.92 and 3.91, respectively, in the corresponding period of 2023. As of March 31, 2024, our assets have continued to perform well.

As of March 31, 2024, our balance sheet remains very strong with cash, cash equivalent and short-term investment of $23.65 billion.

We generated net operating cash flow of 561 million in the first quarter of 2024. The above is our financial summary. With that, now we are ready to open up the Q&A session. Operator, please open the line for the Q&A session.

Thank you. We will now begin the question and answer session. To ask a question, please press star 1 1 on your telephone keypad. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Our first question comes from the line of Brian Gong from City. Brian, please proceed with your question.

Thank you for accepting my question. I have two questions.

The first is that the state has recently introduced some related policies in the automotive industry. I don't know how the management is looking at these policies. What impact will it have on domestic cars? So what specific actions does the state have to deal with? I have two questions. First is regarding the auto policy rollout by the government recently. Can management share your view on this, how will the policy impact the auto market in China, and what measures Auto Home will take to cater those policies? And the second question is regarding our data products for dealers, which has been a key growth driver to the company over the past several quarters. How should we look at the growth potentials for the segment in the future? Thank you.

Okay, thank you for raising this question. Since you raised the two questions, Mr. Wuca will take the first one. Also, in April, the Ministry of Commerce and the Ministry of Finance and the Ministry of Finance issued a notice of the implementation of this car to be renewed. These two specific notices, this notice, in fact, these two notices are clear. Our car is renewed. The policy of financial subsidies has also clarified the scope and standards of subsidies. It should be said that through this policy, The leadership and support is still very big. It can make consumers better involved in the recovery of cars. In fact, enjoy the real advantage of such a Um,

Okay, I think that the two policies you mentioned are actually the notice on the action plan to promote large-scale equipment reuse and consumer goods trading issued by the State Council in March of this year. And the other one is the notice on implementation rules for automobile trading subsidies issued by the Ministry of Commerce and the other seven departments in April. These two notices relate the policy of capital subsidy for Oshimabu trade-in, further clarifying scope and standard of the subsidy, and also allows consumers to better participate in auto trading activities by increasing the policy guidance and support. Therefore, promoting the trading of auto and other consumer goods has become the focus of demand-to-consumption promotion of this year. I think that these two policies are pretty clear. For example, for one NVJ card, it will get a subsidy of 9,000 RMB. And for one IVE card, it will get 7,000 RMB in terms of the subsidy. So I do believe that it will further promote concession.

What impact does this policy have on our domestic market? In fact, I will answer this question in reverse. Yes, there are some changes in the domestic test. I am wondering if this is directly or indirectly influenced by politics. I will talk about some changes in the test from three aspects.

So after the policy was issued, what will be the impact on the auto market? I think that since Q1, the release of the two notices, there are several characteristics happening on the auto market. There's some direct as well as indirect impact. So next, I would like to elaborate on this topic from the three aspects.

First of all, let's look at the sales. According to the data announced by the Chamber of Commerce, in the first quarter of 2024, the sales of our country's car market have recovered. The sales of sales have increased by 13.1%. Mainly, it is true that due to the drop in the price of our two cars, it also adds up to some of the sales that have been held in various places. Such an event makes the demand for this part of the shopping cart increase. As the Beijing Car Expo was held in April, such a situation, the manufacturers actually began to exert force. Okay, firstly, from the macro perspective, data released by CPCA shows that China's auto market sales recovered in the third quarter of 2024.

With retail sales increasing by 13.1% year-on-year due to price cuts by OEM, consumption promotion campaigns can result in different places. Some demand for car purchases have been released in an accelerated manner. With the Beijing Auto Show held in April, OEMs began to launch new brands and new models, and the customer-to-car market has also heated up significantly, and the car market is expected to continue to rebound in the future.

Uh. Uh. Also, we can see that because of this kind of car price competition, we look at the statistics. This year, the scale of used car prices has exceeded 60% last year, which is equivalent to the total scale of the price drop in 2022. In general, we also think that in 2024, this is our car price. This war will continue, especially our new company brand. So from this perspective, if the price of the car goes down, it may be a big burden on the profit direction of our main machine factory itself. This will also bring a lot of uncertainties in the competition pattern. This is the second point.

And secondly, just as I mentioned before, the car sales volume has been constantly on the rise. This is attributable to the trading policies, which the subsidy offered by those developments, as well as the OEMs, of course, the construction will be pushed up. Well, on the other hand, we should also say that the price competition in this industry is still quite few. According to the data released by CPCA, we also see that in the first quarter of this year, the passenger vehicle car price scale It's already 60% of that the same period last year and also the total price cut level of the year 2022. So we think that with this happening, there will still be a lot of pressure on the profit margin of the automakers. While on the other side, the competition landscape is still quite uncertain.

uh uh Many people expect it to be faster, but it has already broken half of this. In fact, with our new energy energy line-up and the increase in charging speed, the downgrade of charging facilities and electric vehicles, more and more consumers are starting to accept new energy energy vehicles. So I'm talking about the change in this structure, which may be faster than we thought. This is the third feature.

And the third thing, we have to look at market structure. We see that from April 1st to April 14th, new energy vehicle sales increased by 32%, while wine and the penetration rate reached 50.21%, which is much faster than many people expected, with improvements of the range as well as the charging speed of the new energy vehicle, the completion of the charging facilities, as well as the decline of the cost. More and more consumers are beginning to accept a new energy vehicle. As a result, we will see that the multi-structure changes will be also faster than our expectations.

Next, I would like to elaborate on the concrete actions which will be taken by Autohome. Uh, what we just talked about may have some uncertainty about the impact on the market. There is good and there is bad, but from a homeowner's point of view, this is a good thing. For users, it is true that they can get real benefits. At the same time, it can stimulate the demand for consumption, so we also have to seize this opportunity. We have also seized this opportunity. We have already made our efforts to become a key cooperation unit for this policy implementation. We co-operate with Beixi Group, Jiao Feng Bank, etc. Taiwan Taiwan Taiwan

As I said before, you can see that the impacts of these policies have both pros and cons on the market. But for Autohome, it is favorable to us because it can deliver real benefits to the users and will also stimulate the demand on the market. So for Autohome, we will definitely grasp this opportunity and you can see that from our own side, we become the key cooperation unit of this campaign. Together with Bayeek Group, Vanguard Communications, as well as the other enterprises, we will actively respond to the core of the national policies, give full play to its platform advantage, and study the ultimate view of markets in gas and public size-driven international policies.

Next, I would like to talk about two concrete actions taken by AutoHome.

The first one is that the newly opened super trading season channel of our AutoHome app is organized and integrated in detail for the subsidy policies of different cities. and car companies to help consumers better understand the details of the relevant policies. While in the meantime, in collaboration with a number of automakers and PN groups, we provide high-quality sell-out and buy-new services through more than 20 auto-home new energy offline stores. We would like to activate the consumption potential and promote the development of the car market.

The second aspect is to organize some activities. On the one hand, the co-operators of the car company, Ping'an Transport, have built a new shopping cart, and through the mobile car of the whole West Cang, they have cooperated with the offline team of Ping'an Transport. Cover three routes 108 cities We use big data to be able to accurately identify the people in need of digitization Cooperate with this market value Buying and selling and other services Can fully activate the potential of consumption On the other hand, the company also specially launched a super stocking event The other thing is that comprehensively, we can see that auto home, we have been joining hands with P&C to create the entry-seating trading for

New car-buying festival covering 108 cities on three routes through mobile, photographic, camping caravans and PI insurance offline teams. And utilizing big data to accurately identify people with replacement needs along with test drive insurance and auto service guarantee to activate automobile consumption potential. On the other hand, we also launched a special super subsidy activity having more than 100 brands, nearly 1,000 car models with the highest subsidy of 6,000 RMB Yen, effectively stimulate the market purchasing power.

In general, because the car industry is highly valued by the country this year, we also believe that with the implementation and landing of this kind of policy, it will further stimulate the consumer activity of the market and ensure that the car industry this year can develop at a high level. We are still very confident.

so far speaking the automobile industry will continue to be valued by the state as well as the government of this year so we think that with the actual implementation of various policies it will further assimilate the market consumption by policy and promote high quality and steady development of the automobile industry this year we're pretty confident about that okay that's all for my answer to the first question thank you Thank you.

The second question about the dealers,

Data products future potential will be taken by Mr. Zeng. So the answer is that actually we see the total number of the pet merchants for data products already exceeded 20,000. So the growth potential is pretty significant.

On this basis, one of our main goals is to allow more merchants to better use our block. This block can really help them achieve more sales and better sales performance. On this issue, on the one hand, we continue to develop new blocks. On the other hand, it also helps our customers to make these blocks better. From now on, The average purchase of each dealer is about five products, but we actually have more than a dozen products, so there is still a lot of space in it. This year, we see that our growth in the first quarter has also reached 27%, which also shows the competitiveness of our product. In the future, we think this growth space will still have a certain growth space.

Our objective is to let more merchants better utilize our modules to promote their own sales, to help them to cut costs and improve efficiency. so in the future we will continue to develop new models in this aspect we will also have this model together operate to actually facilitate our merchants on average each of the merchants they purchase five products but we still have another 11 established and mature products therefore there is still a lot of potential for us to talk into in q1 of this year we see that the growth of this Business is already at 27%. It shows very strong competitive edge. So we believe that there will be a big potential in the future.

OK, Alfreza, the next one.

All right, thank you. Our next question comes from the line of Richie Sun of HSBC. Please proceed with your question, Richie.

Thank you management for taking my questions. I have a question about the used car business. So I noticed that T&T and Pi has been under some impacts from the new car price wall in first quarter. So if this actually continues, so how should we think about the future growth trend and what is our strategy to tackle this? Thank you.

Thank you. Let me answer this question. Let's look at it from three perspectives. First of all, from the market perspective, what we see is actually a mixed signal. Although second-hand car sales growth is 7.6% at the same level, what we actually see is that the days of the car dealers are not good. The PMI index of second-hand car transactions has been below the cash flow line for 16 months. The overall pressure of the industry is relatively large. On the one hand, this is mainly due to the price gap. We can see that the discount from the new car, from the car association, reached 18% at the beginning of the year. The previous year's number was around 12%. The price drop of the new car will definitely bring more pressure to the second-hand car. But it won't continue to be like this, because it will slow down the customer's time to buy a second-hand car.

Okay, I will take this question from three different aspects. First, from the market perspective, we see that in the first quarter, you can see that the used car sales grew by 7.6% year-on-year, a slowdown in growth. By the end of March of this year, domestic used car trading PMI index has been below 50-point mark for 16 consecutive months. The industry as a whole is under some pressure. So I think that this is partly due to the price fall. According to the data released by CPCA, you can see that the new card income has been hit 18%. But in the previous year, it was only 12%. The new car price has been imposing a lot of pressure on the used car. So we see that this is happening, but it means that this will not continue for a long time. Because it will only slow down the replacement, but with only some postponements as well as delays, but it will not continue forever.

From a political point of view, it is more conducive to second-hand cars. The Ministry of Trade and Industry has launched the policy of saving and replacing new cars. Buying new cars means selling old cars first. This is a good opportunity for the development of second-hand cars. In addition, China's overall car maintenance volume has reached a relatively high level. The development of second-hand cars is a leading factor. The main purpose of day-to-day driving is to grow together with the development of second-hand cars in China. Then we will have a lot of opportunities in the future. This is the second aspect of the policy and the big picture.

And the second part is from policy perspective. I think that this is favorable to the used car market. Ministry of Commerce launched the trading policy, sell old and then buy new, bringing new development opportunities to the used car industry. So you can see that a large number of the car parts will also facilitate used car trading on this market. And TTP is also a very important link in the consumption of trade-in, selling old and buying new. So we believe that it will ensure a lot in the future.

From TTP itself, they have also launched a lot of new measures. They have a 30-minute rapid online service to the whole country, including testing, They can order, charge, and quickly sell their services online. Consumers can drive to the site and check for free. They can get a real buyer's discount within 30 minutes. This model greatly improves the efficiency of the buyer's purchase, and achieves a seamless connection between the seller and the buyer. Tintin.py also combines a lot of home and security resources. For example, in the case of a new energy line, consumers can easily buy and sell new products. And Zhijia and the group also have a lot of cooperation with offline businesses to support the expansion of more markets every day.

And the third part is from TTP itself. We can see that recently TTP launched a 30-minute high-speed online national bidding service, including on-site inspection, instant online bidding, and online offers to sell parts quickly. Consumers can drive to the site for free testing and then get posts from the real buyers online within 30 minutes. This model greatly improves the efficiency of consumers' car purchases, realizes the seamless connection between selling old and buying new, and combines with the new energy offline experience so consumers can sell old and buy new in one stop, which helps to activate the used car market as well as to promote the related transactions. And with the offline collaboration between Auto Home and the group as a whole, it will greatly support TDP's future expansion.

Okay, operator, the next question, please.

Thank you. Our next question comes from the line of Thomas Chong from Jefferies. Please ask your question, Thomas.

Good evening. Thank you for accepting my question. I have two questions. The first question I would like to ask is how we see the situation of Beijing's expansion this year and our views on the new energy sector this year. The second question is about our cash use plan. Thank you. Thanks, management, for taking my question. My first question is about management comments about the recent Beijing auto show and how we should think about the EV sector this year. And my second question is about the use of cash. Thank you.

Okay, thank you. Let me answer this question. The Beijing Motor Show is the first in four years to be held in China. The scale is very large, and the number of people paying attention to it is also very high. It attracts a lot of attention from all over the world. The number of visitors has reached 10,000, and it's been a long time. It's almost the end of May, so it's nearly 900,000 people. The world's first car has reached 117 cars. There are 278 new cars, which is also the focus of this exhibition.

Okay, thank you for raising this question. Let me take this one. So for this year's Beijing Auto Show was the first heavyweight auto show held in Beijing in the past four years, and therefore the most attention-grabbing in recent years, attracting a large number of attention from all walks of life and visiting groups. In 10 days of the auto show, including the holidays, we attracted in total 900,000 visitors, with the world's debut of 117 vehicles and 278 new energy models.

In the past two or three years, China has accounted for more than 60% of the global market share of new energy vehicles. China's export of new energy vehicles has also continued to rise. Intellectualization has also attracted a lot of attention. China's new energy industry's strong product and technical strength is recognized. Although the overall data for April has not yet come out, Mr. Wu mentioned that the penetration rate in the first half of the month exceeded 50%. This is the first time in the data released that it can exceed the sales volume of this rail car. In this Beijing car show, New Energy also received great attention. The main exhibition stage of New Energy is also full of people. From the perspective of New Energy, we see that this industry will continue to evolve. The new generation car, which represents the ideal of BRD, its scale has been gradually reduced. Basically, profit and loss are all increased. Of course, there are also some car brands that may gradually lose market share in this intense price range. Losses also increase. In the next three years, it will be very important. The scale, cost, and technology are an important angle to look at which car industry can get certain advantages in this area, and can get more market share. From our side, we will also pay close attention to the market. In this exhibition, we also greatly introduced the model of New Energy. In the future, we will also rely on the power station in our county to increase the power supply. We now have, as I mentioned just now, more than 80 new models of the 3D model of New Energy. We have already cooperated with most of the New Energy brands. The income from New Energy um

So in the year 2023, we see that the NPV production and sales accounted for more than 60% of the global total. China's automobile going global campaign continues to heat up, and intelligent development accelerates year by year, with a strong product power as well as the technical strength. Although the sales figures for the whole month of April are not yet available, but as Mr. Wu-Tang mentioned, market penetration of domestic NUV sales in the first half of April already hit 50%, exceeding traditional field vehicle sales for the very first time. So while at the same time, we also see that the new energy industry continues to diverge in NUV players. You can see that the players represented by BYD and Realtor whose skill effects have gradually appeared and profitability continues to improve. Well, at the same time, there are also car brands that may gradually lose market share and increase losses in a fierce price war. The next three years will be an important period of competition for skill, cost, as well as technology, and any of these companies with strong products of power are expected to gain more market shares. AutoHome will also adapt to the market trend, relying on new energy offline experience stores and cooperates with various new energy brands. As a result, our 3D holographic car models have already covered more than 18 mainstream new energy models. We have cooperated with most of the new energy brands, and revenue from the new energy brands continues to outperform the industrial sales group.

In the past few years, we have been continuously improving the shareholding of the company.

In 2022, we updated the development plan. The fixed 5 billion yuan bonus is equivalent to 28% of the previous year. In 2023, we will further improve the bonus policy. In the first two or three years, we announced the bonus decision of 1 billion yuan. We have already completed this payment in one quarter. And from 2024 to 2026, in three years, we have also announced that the annual share price is no less than 1.5 billion yuan. For a long time, there has been a relatively stable financial situation. The cash flow is also very strong. The cash flow is also very strong. So we will continue to adjust our policies according to the market situation. to enhance the return on investment in this regard.

In terms of our cash use plan, we see that over the past year, all the funds have been committed to continuously improving shareholders' returns. In the year 2022, the Board of Directors updated the dividend payout policy, which is to distribute a fixed amount of $500 million on BN, which is equivalent to 28% of the net profit of that year, and the end of FY23. The company further revised our dividend policy by announcing a decision to pay a dividend of RMB1 billion, and we have completed this dividend payout in the first quarter of this year. As for the three years from FY24 to FY26, we plan to pay dividends every six months, and with a total annual dividend of RMB1.5 billion. So you can see that AutoCom has a long history of solid financial position, cash reserves and strong cash flows. Over the past few years, we have been very strongly giving returns to our shareholders, and we will continue to pay dividends and have been committed to continuously improving shareholders' returns. At the same time, we will also closely monitor the market trend, and we will continue to give the maximum return to other shareholders as advertised.

Operator, the next please.

Thank you. Our next question comes from Sheldon Zhang from CICC. Please proceed with your question, Sheldon.

Thank you, Manager, for accepting my question. My question is about our traditional media business. Actually, I just mentioned that since this year, the budget of the main airport is still biased. I would like to ask Manager to share with us how the record-breaking trend of our media advertising business should be reflected. Thank you. I'm so thanks management for taking my questions. And it's things on the advertising budget for OEM is still tight this year. So what is your outlook for our media services business for the subsequent quarters? Thank you.

Thank you. Let me answer this question. As I mentioned earlier, because when we saw these special fuel cars in the first quarter, including businessmen. Everyone is trading at the same price, so more of the budget is directly put on the price. The space for profit is also compressed, so from the market point of view, the advertising budget is indeed reduced. Our figures also react to this situation.

Okay, thank you for raising this question. I will take this question. We see that in terms of the sales of ICE vehicles as well as any vehicles in the first quarter, we see that actually even though the sales volume increased by 4%, however, we see that actually all of the automakers have been purchasing, have been procuring their strategy of price for volume, as a result the profit margin has been squeezed. We have been spending more budget on directly subsidizing the consumers to actually improve the volume, as a result advertising budget has been squeezed.

Of course, the new cars are not the same as the old ones, right? These car advertisements are a bit bigger. In addition, in the media advertising revenue of the first quarter, the revenue of the ads from the new media is still the same. In the future, this kind of income will still have a greater room for growth. And this strategy of increasing the amount of ads, although we expect it will last for a while, so there may be pressure in advertising investment in the short term. But from a longer-term perspective, It's a relatively large consumer base. Single-storey stores rely on prices, but they continue to rise. So in the end, it will return to a normal trading strategy. At that time, it will improve.

Well, in Simca, we see that NEV companies have increased their advertising investments. For example, in the first quarter, Autofoam's media advertising revenue from NEV players doubled YOY and it will continue to grow in the future. And we also expect that the price-for-volume strategy of OEMs will continue but will not continue forever. So the advertising budget will still be under pressure in the short period of time forever. In the long run, we believe that actually we will continue to pay more attention to advertising and the advertising budget will come back to the normal track because the market will continue to follow the right direction.

OK. Operator, if there are no extra questions, we'll come to the end of this Q&A session.

Thank you, sir. There are no further questions at this time. I'll turn the conference back to the management team for closing comments.

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

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect. you Thank you. Thank you.

Thank you.

Ladies and gentlemen, thank you for standing by for Autohome's first quarter 2024 earnings conference call. At this time, all participants are in 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 this earnings conference call will also be available on AutoHomes IR website. It is now my pleasure to introduce your host, Sterling Sung, AutoHomes IR Director. Mr. Sung, please go ahead.

Thank you. Thank you, operator. Hello, everyone, and welcome to AutoHomes first quarter 2024 earnings conference call. Earlier today, AutoHomes 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 Yanzeng. Management will go through their prepared remarks first, which will be followed by a Q&A session, where they will be available to answer your questions. Before we continue, please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Security 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 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 and applicable laws. Please also know that AutoHome's earnings checklist and this conference call include discussion of certain unaudited non-GAAP financial measures. The reconciliation of the non-GAAP measures to 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. Tao 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 our earnings conference call today.

I am very happy to report to everyone that the performance of the first quarter of the family of cars is very stable. Total revenue reached RMB 16.1 billion, net growth 4.9%, online marketing and other business income continued to achieve a double-digit 13% net growth. The net profit is 34.5%, which is quickly improved by the data production of smart products. In the same period of 23 years, the growth exceeded 10%. New energy businesses also continue to maintain a strong growth trend. The net profit is 49.6%. In terms of profits, the first quarter belongs to the I'm pleased to report a solid start to the year with total revenues growing by 4.9% year-over-year to 1.61 billion RMB. Revenues from the online marketplace and others continue to achieve double-digit growth

increasing by 17% year-over-year, rising to 34.5% of total revenues. Notably, we continue to see strong growth in revenues from our data products, which increased over 10% in the quarter from a year earlier, driven primarily by our smart series products. We also saw robust growth in our AEB business, with revenues for the quarter increasing by 49.6% year-over-year. Adjusted net income attributable to auto home per quarter was up 2.2% year-over-year to 494 million RMB, while our adjusted net profit margin remained at a relatively high level of 30.7%.

In the field of innovative business, with the opening and operation of the roadside of the Car Home Space Station, our influence has gradually penetrated into the wider car area consumer market, effectively promoting the online and offline integrated development of home businesses. We have further intensified our cooperation with Ping'an Group, allowing consumers to enjoy a more secure, relaxed and convenient service experience. For our innovative business, as new franchise stores are on track to open, our old home space will expand further into a broader geographic area, driving the development of our online and offline integration.

We also further strengthened our collaboration with Ping An Group through providing consumers with greater peace of mind and a more convenient user experience. In addition, we actively responded to the national trade-in for new policy, launching a series of initiatives such as the 100 cities trade-in for new car buying festival in collaboration with Ping An Group, allowing consumers to enjoy even more benefits.

Looking forward to the future, we will continue to maintain a professional spirit and continue to promote innovation to meet the needs of users and customers with better and more convenient products and services. At the same time, we will continue to work hard to perfect and optimize the overall business structure of the company, ensuring that both traditional and new industries can achieve sustainable development. Looking forward we are committed to maintaining our professionalism and expertise

We are driving continuous innovation and offering even more convenient and high-quality products and professional services to our users and clients. Meanwhile, we will continue to refine, improve, and optimize our overall business framework to ensure sustainable development in both traditional and emerging sectors. Additionally, we will fully leverage the Ping An Group's vast resources to explore and develop opportunities in various areas, including automotive ecosystems, big data, cooperative car ownership services, and user benefits. Together, we will develop even greater synergies and push forward with new business initiatives.

Next, I would like to invite Mr. Zeng Yan, the CFO, to introduce the business and financial situation of the first quarter of 2020.

With that, I will now turn the call over to our CFO, Greg Sun, for a closer look at our first quarter 2024 operating and financial results. Thank you, Mr. Wu. Hello, everyone. I'm Greg Sun, the Chief Financial Officer of Auto Home.

In the first quarter, we continue to focus on the advantageous content. practical tools, and high-quality services, and create the influence of a car brand. In March, we are looking forward to the launch of the new model, launching the original new car content IP, and launching the live broadcast on the eight major online platforms. With the fastest speed, the best time and the deepest analysis, we will bring users a new professional content experience.

In the first quarter, we continue to focus on developing high-quality content, practical tools, and premium services to enhance Autohome's brand influence. In March, amid a flurry of new car launches, we introduced our original IP content, SoFastSoTest, forecasting on eight major online platforms. By offering comprehensive real-world testing and in-depth analysis of the latest models, we provided a fresh content experience that has received widespread positive feedback from both users and clients. This new content tallies more than 500 million exposures across all platforms, significantly enhancing Autohome's influence.

In addition, due to the frequent fluctuation of car price, we have also listed price and price tools. First, it allows users to see the trend of car price directly, and then it further enriches the comparison degree of the car, improve the comparison effect, and make the process of customer purchase decision-making more efficient and convenient. FACMobile data shows that

In addition, in response to escalating price competition and frequent fluctuations in vehicle pricing, we introduced a number of innovative tools, including a price trend tracker and a comprehensive model comparison tool. The former enables users to intuitively see pricing trends, while the latter provides enhanced detailed comparisons to improve the comparison and decision-making process. According to Quest Mobile, average mobile BAUs reached 69.39 million in March, an increase of 8.1% from a year earlier, which clearly demonstrates the effectiveness of our content-focused strategy for user growth.

In the energy sector, the car space station has made significant progress in the layout, covering not only the core cities of North, Shang, Guang, Chongqing, Chengdu and other first-tier cities, but also the important second-tier provinces such as Kunming, Guiyang, Jinan. and further down to Le Shan, Zhaoqing, Qingyuan, and other three or four-line cities with potential. We have implemented a wide range of city coverage. In the first quarter, we also authorized nine city partnerships. These city partnerships will be launched continuously within the next two or four years. This will greatly promote the expansion of our new energy car service ecosystem to low-end cities.

turning to nev old home space continues to make significant progress autumn space is not only present in major cities including beijing shanghai guangzhou chongqing and chengdu but has also expanded into key second-tier provincial capital cities, including Kunming, Guiyang, and Jinan, etc., as well as promising third- and fourth-tier cities like Leshan, Zhaoqing, and Qingyuan, etc., reaching broad market coverage. During the quarter, we also granted franchise drives to partners in nine additional cities, where stores are on track to open later this year. This expansion will significantly enhance the presence and reach of our AEV services geographically, expanding our reach to additional users.

On the other hand, the space station itself, as an effective base for marketing services, has unique advantage resources and strong digitalization efforts. We will make full use of these advantages to provide a comprehensive marketing solution for the main airport, Currently, our 3D all-in-one model covers more than 80 mainstream new energy car models in the market. In the first quarter, our new retail business cooperation brand has more than 30 new car launches, test drives, test drives, comparison test drives, and other types of marketing activities, with more than 100 factories. In addition, the income of the new energy brand in the first quarter of this year has increased by 49.6% and continues to run in the sales rate of the industry.

Our own home space doors also function as an effective marketing platform equipped with substantial online and offline resources as well as advanced digital capabilities. Leveraging these advantages, we can provide OEMs with integrated one-stop marketing solutions. Currently, our 3D holographic car models cover more than 80 mainstream NEV models in the market. In the first quarter, Our new retail business collaborated with more than 30 brands, launching over 100 marketing events, including new car launches, test drives, and a driving comparison. Revenue from NEB brands in the first quarter of this year increased by 49.6% from a year earlier, consistently outpacing industry growth rate.

In the digital field, we continue to strive to drive the deep use and landing of large language models. We have gradually changed the original dialogue robot based on the strategy to a car industry customized large-scale model, applied to AI outsourcing, service dialogue, sales, content production, creation, and other scenarios, thereby significantly improving the quality and efficiency of original data products. This approach not only improves product performance, but also helps us effectively expand the coverage range of the business.

For digital products, we are committed to applying large language models or LLMs more widely across our business. We are gradually replacing existing strategy-based chatbots with customized LLMs that are tailored to the automotive industry. These LLMs are now being used for AI's outbound calls, customer services, and the creation of marketing content, significantly enhancing the quality and efficiency of our existing data products. This initiative not only refines our product performance, but also expands the coverage of our clients. In the first quarter, the number of dealers that purchased our data products continue to increase driving revenue growth of 27% year-over-year for dealer data products.

We also apply our digitalization capability to the second-hand car industry to create a transparent and reliable trading environment. For example, at the user's end, we provide car mining comprehensive survey tools to help users restore real car mines and recruit high-quality car users. At the customer's end, We have also applied our digital capabilities to the used car business,

creating a transparent and trustworthy buying environment. For instance, for consumers, we provide a comprehensive set of tools to verify true vehicle conditions to help buyers accurately assess a vehicle and select quality cars options. For dealerships, we offer a broad range of tools, including price and vehicle condition checks, as well as digital marketing solutions to help them improve operational efficiency. In the first quarter, the number of dealerships that queried our one-stop vehicle condition and pricing platform saw a year-over-year increase of more than 80%, reflecting dealerships' recognition of Autohome's expertise.

In summary,

Autohome achieved steady growth in revenue and profit in the first quarter this year, driven by the rapid development of our digital products and the NEV businesses. Additionally, the introduction, replication, and interactive updates to our new innovative business models are increasingly contributing, diversifying, and optimizing our revenue mix. Looking ahead, We will continue to explore new businesses, leverage Ping An Group's unique advantages, discover new opportunities to collaborate and promote the sustained and healthy development of auto-home.

Next, I will explain the main financial situation of car owners in the first quarter of 2024. Please note that I will only use RMB as a currency unit in today's discussion unless there is another explanation.

Let me briefly walk you through the key financials for the first quarter of 2024. Please note that, as with prior course, our references aren't the only in my discussion today unless otherwise stated.

The total revenue of the first quarter is 16.1 billion yuan. In summary, the total revenue of the media service is 3.27 billion yuan. The total revenue of the online service is 7.26 billion yuan. The total revenue of the online marketing and other services is 5.55 billion yuan.

Net revenues for the first quarter were $1.61 billion, breaking it down by segments. Media services revenues were $327 million. Lease generation services revenues were $726 million. And online marketplace and others revenues were $555 million, up 13% year over year.

Cost of revenues in the first quarter was 301 million compared to 340 million in the first quarter of 2023. Gross margin in the first quarter was 81.3%

compared to 77.8% during the same period last year.

In terms of business expenses, the first quarter sales and market expenses are 6.41 billion yuan, the same period as the previous year is 5.23 billion yuan, the annual expenses are 3.36 billion yuan, the same period as the previous year is 3.24 billion yuan, the general and management expenses are 1.5 billion yuan, the same period as the previous year is 1.49 billion yuan.

Turning to operating expenses, sales and marketing expenses in the first quarter were 641 million compared to 523 million in the first quarter of 2023. Product and development expenses were 336 million compared to 324 million in the first quarter of 2023. Finally, general and administrative expenses were $150 million compared to $149 million during the same period last year.

In total, the first quarter of the car family's annual profit was $2.76 billion, and the above-mentioned period was $2.63 billion. The current adjusted profit of the car family was $4.94 billion, and the above-mentioned period was $4.84 billion.

Overall, we delivered an operating profit of $276 million in the first quarter compared to $263 million in the corresponding period of 2023. Adjusted net income attributable to auto home was $494 million in the first quarter compared to $484 million in the corresponding period of 2023.

Non-GAAP Basic and Diluted Earnings Per Share

in the first quarter were 1.02 up from 0.98 in the corresponding period of 2023. Non-GAAP basic and diluted earnings per ABS in the first quarter were 4.08 and 4.07 respectively, compared to 3.92 and 3.91 respectively in the corresponding period of 2023.

As of March 31, 2024, our balance sheet remains very strong with cash, cash equivalent and short-term investments

of 23.65 billion. We generated net operating cash flow of 561 million in the first quarter of 2024. The above is our financial summary. With that, now we are ready to open up the Q&A session. Operator, please open the line for the Q&A session.

Thank you. We will now begin the question and answer session. To ask a question, please press star 1 1 on your telephone keypad. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Our first question comes from the line of Brian Gong from Citi. Brian, please proceed with your question.

Thank you for accepting my question. I have two questions.

The first is that the state has recently introduced some related policies in the automotive industry. I don't know how the management is looking at these policies and what impact they will have on domestic cars. So what specific actions does the state have to deal with? I have two questions. First is regarding the auto policy rollout by the government recently. Can management share your view on this, how the policy impacts auto marketing in China, and what measures Auto Home will take to cater those policies? And the second question is regarding our data products for dealers, which has been a key growth driver to the company over the past several quarters. How should we look at the growth potentials for the segment in the future? Thank you.

Okay, thank you for raising this question. Since you raised the two questions, Mr. Wuca will take the first one. And in April, the Ministry of Commerce and the Ministry of Finance and the Ministry of Finance issued a notice to implement the implementation of this car to save Huaxing. These two specific notices, this notice, in fact, these two notices are clear. The policy of our car to save Huaxing's capital subsidies has also clarified the scope and standard of subsidies. It should be said that through this The leadership and support is still very big. It can make consumers better involved in the car rescue environment. In fact, enjoy the real advantage of such a I think this policy is very clear. To put it simply, if you change your mind, it's like our new cars. Normally, you can buy a car for 9,000 yuan. A car is about 7,000 yuan. So it should be said that this is a push car. If you change your mind, there is a real one. It's really a very good push.

Okay, I think that the two policies you mentioned are actually the notice on the action plan to promote large-scale equipment reuse and consumer goods trading issued by the State Council in March of this year. And the other one is the notice on implementation rules for automobile trading subsidies issued by the Ministry of Commerce and the other seven departments in April. These two notices relate the policy of capital subsidy for Oshimabu trade-in, further clarifying scope and standard of the subsidy, and also allow consumers to better participate in auto trading activities by increasing the policy guidance of support. Therefore, promoting the trading of auto and other consumer goods has become the focus of demand-to-consumption promotion of this year. I think that these two policies are pretty clear. For example, for one NBJ card, it will get a subsidy of 9,000 RMB. And for one ICE card, it will get 7,000 RMB in terms of the subsidy. So I do believe that it will further promote concessions.

What impact does this policy have on our domestic market? Actually, I will answer this question in reverse. So I'm wondering if this is influenced by politics. There may be some direct and indirect policies, but I will talk about some changes in the test from three aspects.

So after the policy was issued, what will be the impact on the auto market? I think that since Q1, the release of the two notices, there are several characteristics happening on the auto market. There's some direct as well as indirect impact. So next, I would like to elaborate on this topic from the three aspects.

First of all, let's look at the sales. According to the data announced by the Chamber of Commerce, in 2024, the sales of our country's car market have recovered. The sales of retail have increased by 13.1%. The main reason is that due to the drop in the price of our two cars, we have also added some of the sales activities that have been held in various places, which has caused the demand for this part of the purchase to slow down. As the Beijing Car Exhibition was held in April, such a situation occurred, and all the manufacturers actually began to exert force. Okay, firstly, from the macro perspective, data released by CPCA shows that China's auto market sales recovered in the third quarter of 2024.

with retail sales increasing by 13.1% year-on-year due to price cuts by OEM. Consumption promotion campaigns can result in different places. Some amounts of car purchases have been released in an accelerated manner, with the Beijing Auto Show held in April. OEMs began to launch new brands and new models, and the tourism of the car market has also heated up significantly, and the car market is expected to continue to rebound in the future.

Uh. Uh. Also, we can see that because of this kind of car price competition, we look at the statistics. This year, the scale of used car prices has exceeded 60% last year, which is equivalent to the total scale of the price drop in 2022. In general, we also think that in 2024, our car price war will continue, especially our new car brand. So from this perspective, if the price of the car goes down, it may be a lot of pressure on the profit direction of our main factory itself. This will also lead to a lot of uncertainties in the competition pattern. This is the second point.

And secondly, just as I mentioned before, the car sales volume has been constantly on the rise. This is attributable to the trading policies. With the subsidy offered by those developments, as well as the OEMs, of course, the consumption will be pushed up. While on the other hand, we should also say that the price competition in this industry is still quite steep. According to the data released by CPCA, we also see that in the first quarter of this year, the passenger vehicle car price scale It's already 60% of that the same period last year and also the total price cut level of the year 2022. So we think that with this happening, there will still be a lot of pressure on the profit margin of the automakers. While on the other side, the competition landscape is still quite uncertain.

The third point is that we look at it from this structure, because this structure may not be so closely related to the policy. From the perspective of the market structure, in fact, from April to April 14, the sales of our news sources increased by 32%, the penetration rate broke through 50 and reached 50.39. In fact, this penetration rate is indeed Many of us expected it to be faster, but it has already broken half of this. In fact, as the range of our new workers increases, the speed of charging increases, and the cost of charging facilities decreases, more and more small and medium-sized companies are starting to accept new workers' cars. So I'm talking about the change in this structure, which may be faster than we thought. This is the third feature.

And the third thing, we have to look at market structure. We see that from April 1st to April 14th, new energy vehicle sales increased by 32%, while wine and the penetration rate reached 51%, which is much faster than many people expected. With the improvement of the range as well as the charging speed of the new energy vehicle, the completion of the charging facilities as well as the decline of the cost, more and more consumers are beginning to accept the new energy vehicle. As a result, we will see that the multi-structure changes will be also faster than our expectations.

Okay. Next, I will briefly talk about the specific actions of our family.

Next, I would like to elaborate on the concrete actions which will be taken by Autohome.

Uh, what we just talked about may have some uncertainty about the impact of the market. There is good and there is bad, but from the point of view of the home, this is a good thing. For users, it is true that they can get the real advantage. At the same time, it can stimulate the demand for consumption, so we also have to seize this opportunity. We have also seized this opportunity. We have already made our efforts to become a key cooperation unit for this policy implementation. We are cooperating with the Beixi Group, Jiao Feng Bank, etc. Taiwan Taiwan

As I said before, you can see that the impacts of these policies have both pros and cons on the market. But for Autohome, it is favorable to us because it can deliver real benefits to the users and will also stimulate the demand on the market. So for Autohome, we will definitely grasp this opportunity and you can see that from our own side, we become the key cooperation unit of this campaign. Together with Bayeek Group, Vanguard Communications, as well as the other enterprises, we were asked to fully respond to the core of the national policies, give full play to its platform advantage, and study the ultimate view of markets in gas and publicized revenue national policies.

Okay.

Next, I would like to talk about two concrete actions taken by AutoHome.

The first one is that the newly opened Super Trading Season channel of our AutoHome app is organized and integrated in detail for the subsidy policies of different cities. and car companies to help consumers better understand the details of the relevant policies. While in the meantime, in collaboration with a number of automakers and PM groups, we provide high-quality sell-out and buy-new services through more than 20 auto-home new energy offline stores. We would like to activate the consumption potential and promote the development of the car market.

Uh, the second aspect is mainly to launch some activities. On the one hand, the company's co-workers, Ping'an Provincial Provincial Provincial Provincial, jointly built a new shopping cart, through the mobile whole west cabin of the red car and the offline team of Ping'an Provincial Provincial. Covering three routes, 108 cities, we use big data to accurately identify the people who are in need of digitization. Cooperate with the market value, purchase, return, and other services to fully activate the risk of consumption. On the other hand, the company has also specially launched a super stocking activity. uh the other thing is that uh comprehensively we can see that auto home we have been joining hands with pnc to create the interest of henry city's trading for

New car-buying festival covering 108 cities on three routes through mobile, photographic, camping caravans and TN Insurance's offline team, and utilizing big data to accurately identify people with replacement needs, along with test-drive insurance and auto service guarantees to activate automobile consumption potential. On the other hand, we also launched a special super-subsidy activity Having more than 100 brands, nearly 1,000 car models with the highest subsidy of RMB 6,000, effectively stimulate the market purchasing power.

In general, because the car industry is highly valued by the country and the government this year, we also believe that with the implementation and landing of this kind of policy, it will further stimulate the consumer activity of the market and ensure that the car industry this year can develop at a high level. We are still very confident.

So far speaking, the automobile industry will continue to be valued by the state as well as the government of this year. So we think that with the actual implementation of various policies, it will further stimulate the market consumption vitality and promote high quality and steady development of the automobile industry this year. We're pretty confident about that. Okay, that's all for my answer to the first question. Thank you. Thank you.

The second question about the dealers,

Data products' future potential will be taken by Mr. Zeng. So the answer is that actually we see the total number of the pet merchants for data products already exceeded 20,000. So the growth potential is pretty significant.

On this basis, one of our main goals is to allow more merchants to better use our block. This block can really help them achieve more sales and better price increase. On this issue, on the one hand, we continue to develop new blocks. On the other hand, it also helps our customers to make these blocks better. From now on, The average purchase of each dealer is about five products. But we actually have more than a dozen more mature products, so there is still a lot of room for improvement. This year, we see that our growth in the first quarter has also reached 27%. This also shows the competitiveness of our product. In the future, we think there is still room for improvement.

Our objective is to let more merchants better utilize our modules to promote their own sales, to help them to cut costs and improve efficiency. So in the future, we will continue to develop new models in this aspect. We will also have these models to better operate to actually facilitate our merchants. On average, each of the merchants, they purchase five products, but we still have another 11 established and mature products. Therefore, there is still a lot of potential for us to talk into. In Q1 of this year, we see that the growth of this business is already at 27%. It shows very strong competitive edge, so we believe that there will be a big potential in the future.

Okay, Alfreza, the next one.

All right, thank you. Our next question comes from the line of Richie Sun of HSBC. Please proceed with your question, Richie.

Thank you management for taking my questions. I have a question about the used car business. So I noticed that T&T and Pi has been under some impacts from the new car price walls in first quarter. So if this actually continues, so how should we think about the future growth trend and what is our strategy to tackle this? Thank you.

Thank you. Let me answer this question. Let's look at it from three perspectives. First of all, from the market perspective, what we see is actually a mixed signal. Although the share price of second-hand cars has increased by 7.6%, what we actually see is that the days of car dealers are not good. The P&M index of second-hand car transactions has been below the cash flow line for 16 months. the overall pressure of the industry is relatively high. On the one hand, this is mainly due to the price gap. We see that the discount from the new car, from the city council, reached 18% at the beginning of the year. The previous year's figure was around 12%. The price of the new car will inevitably bring more pressure to the second-hand car. But this will not continue like this, because it will slow down the client's time to change the second-hand car, and it will also make the client more likely to choose a new car. But after a period of time, it will come back, so it will be a little slower, but it will not continue like this all the way.

Okay, I will take this question from three different aspects. First, from the market perspective, we see that in the first quarter, you can see that the used car sales grew by 7.6% year-on-year, a slowdown in growth. By the end of March of this year, domestic used car trading PMI index has been below 50-point mark for 16 consecutive months. The industry as a whole is under some pressure. So I think that this is partly due to the price war. According to the data released by CPCA, you can see that the new cost income has been increased 18%. But in the previous year, it was only 12%. The new car price card has been imposing a lot of pressure on the used car. So we see that this is happening, but it means that this will not continue for a long time because it will only slow down the replacement, but with only some postponements as well as delays, but it will not continue forever.

From this perspective, it is more conducive to second-hand cars. The Ministry of Trade and Industry has launched a policy to replace old cars. Buying new cars means selling old cars first. This is a good opportunity for second-hand cars to develop. In addition, China's overall car maintenance volume has reached a relatively high level. The development of second-hand cars is a matter of course. The main purpose of day-to-day driving is to grow together with the development of second-hand cars in China. Then we will have a lot of opportunities in the future. This is the second part of the policy and the big picture.

And the second part is from policy perspective. I think that this is favorable to the used car market. Ministry of Commerce launched the trading policy, sell old and then buy new, bringing new development opportunities to the used car industry. So you can see that a large number of the car parts will also facilitate used car trading on this market. And TTP is also a very important link in the consumption of trade-in, selling old and buying new. So we believe that it will enjoy a lot in the future.

From TTP itself, they have also launched a lot of new measures. They have a 30-minute instant online national order service, including testing, timely online order, online bargain, and quick sales service. Consumers can drive to the site and check for free within 30 minutes from the real buyer's price on the line. This mode greatly improves the efficiency of the buyer's purchase to achieve a seamless connection between the seller and the buyer. TiantianPai also combines a lot of home and security resources. For example, the XinyangYuan offline experience store. Consumers can buy and sell in a one-stop way. And the third part is from TTP itself. We can see that recently TTP launched a 30-minute high-speed online national bidding service, including on-site inspection, instant online bidding, and online offers to sell parts quickly.

Consumers can drive to the site for free testing and then get quotes from the real buyers online within 30 minutes. This model greatly improves the efficiency of consumers' car purchases, realizes the seamless connection between selling old and buying new, and combines with the new energy offline experience so consumers can sell old and buy new in one stop, which helps to activate the used car market as well as to promote the related transactions. And with the offline collaboration between Autohome and the group as a whole, it will greatly support TDP's future expansion.

OK. Operator, the next question, please.

Thank you. Our next question comes from the line of Thomas Chong from Jefferies. Please ask your question, Thomas.

My first question is about management comments about the recent Beijing auto show and how we should think about the EV sector this year. And my second question is about the use of cash. Thank you.

Okay, thank you. Let me answer this question. This year is the 4th anniversary of Beijing's launch of the heavyweight car show. The scale is very large, and the attention is also very high. It attracts a lot of attention from all over the world. It's been a long time since the exhibition was held. It's almost the end of May, so it's nearly 900,000 people. There are 117 first-hand cars in the world. There are 278 new cars, which is also a highlight of this exhibition.

Okay, thank you for raising this question. Let me take this one. So for this year's Beijing Auto Show was the first heavyweight auto show held in Beijing in the past four years, and therefore the most attention-grabbing in recent years, attracting a large number of attention from all walks of life and visiting groups. In 10 days of the auto show, including the holidays, we attracted in total 900,000 visitors, with the world's debut of 117 vehicles and 278 new energy models.

In the past two or three years, China has accounted for more than 60% of the global market share of new energy vehicles. China's export of new energy vehicles has also continued to rise. Intellectualization has also attracted a lot of attention. China's strong product and technical strength in new energy vehicles is recognized. Although the overall data for April has not yet come out, Mr. Wu mentioned that the penetration rate in the first half of the month exceeded 50%. This is the first time in the data released that it can exceed the sales of gasoline vehicles. In this Beijing car show, new energy workers have also received great attention. The main stage of the new energy workers is also full of people. From the perspective of new energy workers, we see that this industry will probably continue to evolve. The new generation of cars representing the ideal of Biadiya, its scale effect has gradually increased. in terms of profit and loss. Of course, there are also some car brands that may gradually lose market share in this intense price war. Losses are also increasing. In the next three years, it will be very important. The scale, cost, and technology are an important point of view. Let's see which car brands can get certain advantages in this area, and can get more market share. From our side, we will also pay close attention to the market. In this exhibition, we have also increased the introduction of the new energy car model. In the future, we will also rely on our offline supply chain to increase the experience. We now have, as I mentioned just now, more than 80 new models of three-dimensional new energy car models. We have already cooperated with most of the new energy brands. The income from new energy is also continuously increasing in the industry. So we don't think that new drivers will completely replace diesel cars, but the level of new drivers in the market is gradually increasing.

so in the year 2023 we see that the mvv production and sales accounted for more than 60 percent of the global total china's automobile going global campaign continues to heat up and intelligent development accelerated year by year with a strong product power as well as the technical strength Although the sales figures for the whole month of April are not yet available, but as Mr. Wu-Tang mentioned, market penetration of domestic NUV sales in the first half of April already hit 50%, exceeding traditional field vehicle sales for the very first time. So while at the same time, we also see that the new energy industry continues to diverge in NUV players. You can see that the players represented by BYD and Realtors whose skill effects have gradually appeared and profitability continues to improve. Well, at the same time, there are also car brands that may gradually lose market share and increase losses in a fierce price war. The next three years will be an important period of competition for skill, cost, as well as technology, and any of these companies with strong products of power are expected to gain more market shares. Auto Home will also adapt to the market trend, relying on new energy offline experience stores and cooperates with various new energy brands. At present, our 3D holographic car models have already covered more than 18 mainstream new energy models. We have cooperated with most of the new energy brands, and revenue from the new energy brands continues to outperform the industrial sales group.

In the past few years, we have been continuously improving the shareholding of our shareholders. In 2022, we updated the development plan for the stock market. The fixed 5 billion yuan bonus is equivalent to 28% of what was established at that time. In 2023, we further adjusted the bonus policy. At the end of 2023, we announced the bonus decision of 1 billion yuan for the People's Bank of China. We have completed this payment in one quarter. And from 2024 to 2026, in three years, we also announced that the annual bonus is no less than 1.5 billion yuan. For a long time, there has been a relatively stable financial situation. The cash flow is also very strong, so we will continue to adjust our policies according to the market situation, but we will adjust them in the direction of strengthening the return on investment.

In terms of our cash use plan, we see that over the past year, all the fund has been committed to continuously improving shareholders' returns. In the year 2022, the Board of Directors updated the dividend payout policy, which is to distribute a fixed amount of $500 million on BN, which is equivalent to 28% of the net profit of that year, and the end of FY23. The company further revised our dividend policy by announcing a decision to pay a dividend of RMB1 billion, and we have completed this dividend payout in the first quarter of this year. As for the three years from F-124 to F-126, we plan to pay dividends every six months, and with a total annual dividend of RMB1.5 billion. So you can see that Autofarm has a long history of solid financial position, cash reserves and strong cash flows. Over the past few years, we have been very strongly given returns to our shareholders and we will continue to pay dividends and have been committed to continuously improving shareholders' returns. At the same time, we will also closely monitor the market trend and we will continue to give the maximum return to our shareholders as advertised.

Operator, the next please.

Thank you. Our next question comes from Sheldon Zhang from CICC. Please proceed with your question, Sheldon.

Thank you, Manager Chen, for accepting my question. My question is about our traditional media business. Actually, as I just mentioned, the budget of the main airport has been biased since this year. I would like to ask Manager Chen to share with us a record-breaking trend of our media advertising business. Thank you. Now, I'll quickly translate it. So, thanks, management, for taking my questions. And it seems the advertising budget for OEM is still tight this year. So, what is your outlook for our media services business for the subsequent quarters? Thank you.

Okay, thank you. I'll answer this question. As I mentioned earlier, because we saw these, especially in the first quarter, including businessmen, are all in exchange for the same price. So more of the budget is directly put on the price. We are also suppressing the space for profit. So in terms of the market, the advertising budget is indeed being reduced. Our numbers are also reacting to this situation.

Okay, thank you for raising this question. I would like to take this question. We see that in terms of the sales of ICE vehicles as well as MEV vehicles in the first quarter, we see that actually even though the sales volume increased by 4%, however, we see that actually all of the automakers have been purchasing, have been procuring their strategy of As a result, the profit margin has been squeezed. We have been spending more budget on directly subsidizing the consumers to actually improve the volume. As a result, advertising budget has been squeezed.

In addition, in the media advertising revenue of the first quarter, the revenue from the new media is still the same. In the future, this kind of income will still have a relatively large room for growth. And this strategy of adding and replacing will continue for a while. So maybe in the short term, the advertising investment budget is under pressure. But from a longer term perspective, this car is after all a It's a relatively large consumer base. The price war between the single market and the price war continues. So in the end, it will return to a normal trading strategy. At that time, it will improve.

Well, in the same time, we see that NEV companies have increased their advertising investments. For example, in the first quarter, Autofoam's media advertising revenue from NEV players doubled YOY and it will continue to grow in the future. And we also expect that the price-for-volume strategy of OEMs will continue but will not continue forever. So the advertising budget will still be under pressure in the short period of time forever. In the long run, we believe that actually we will continue to pay more attention to advertising and the advertising budget will come back to the normal track because the market will continue to follow the right direction.

OK. Operator, if there is no extra question, we come to the end of this Q&A session.

Thank you, sir. There are no further questions at this time. I'll turn the conference back to the management team for closing comments.

OK. Thank you for attending today's meeting. We look forward to the latest development of the company through the next conference. Thank you everyone.

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

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.