Autohome Inc.

Ladies and gentlemen, thank you for standing by for Autohome's fourth quarter and full year 2024 earnings conference call. At this time, all participants are in a 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 Autohome's IR website. It is now my pleasure to introduce your host, Mr. Sterling Song, Auto Home's IRR Director. Mr. Song, please go ahead.

Thank you, operator. Hello, everyone. I'm Sterling, and welcome to Auto Home's fourth quarter and three-year 2024 earnings conference call. Earlier today, Auto Home distributed its earnings release, which can be found on the company's IRR website, irf.autohome.com.bn. Joining us on today's call, our Chief Executive Officer, Ms. Sun Yang, 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 contend for looking statements made under the Safe Harbor Provision 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. Auto Home doesn't undertake any obligation to update any forward-looking statements except as required and applicable law. Please also know that Autohome's earnings press release and this conference call include discussions of certain unaudited non-GAAP financial matters. A reconciliation of the non-GAAP matters to the more directly comparable GAAP matters can be found in our earnings release. I'll now turn the call over to Autohome CEO, Ms. Yang, for opening remarks. Please go ahead, Ms. Yang.

Thank you, Songkai. Hello, everyone. Hello, everyone. This is Song Yang, CEO of Auto Home, and thank you for joining our earnings conference call today.

Today is my first time to join the earnings conference call as the CEO of the company. We suppose you have read the update filing by the company earlier today. Higher Group has become the new controlling shareholder of Autohome.

As the leading online platform for car consumers in China, Autohome is the core support for data and technology. It has a broad user base, in-depth industry insights and professional training. as well as a strong stock market, business network, and stable financial system. Hire's strategic approach is a recognition of the business model and market potential, and will also contribute to the long-term development of the automotive industry.

Autohome, as China's leading online automotive consumer platform, It's supported by the core foundation of data plus technology, both a broad user base, deep industry insights, professional content, a strong network of OEMs and dealers, and a strong financial system. Higher strategic investments reflect recognition of Autohome's business model and market potential, and will inject new vitality into Autohome's long-term developments.

In the future, we will continue to consolidate the development of current operations by using Hire's advanced management experience and Cartex's operating system to support the development of in-depth experience in the field of smart hardware connections and new cars. We will continue to strengthen the smart interaction and comprehensive operating service capabilities of Hire. to further promote the company's innovation and growth, and serve each user in a better way.

In the future, AutoHome will serve as a key hub in Haier's automotive industry ecosystem, continuing to solidify and develop the existing businesses while leveraging advanced management experience of Haier and operational systems of CarTech in deeper user experiences, smart hardware connectivity, and new automotive retail to continue to strengthen AutoHome's O2O intelligent exchange and comprehensive service capabilities.

further driving innovation and growth for the company and better serving every user.

At the same time, Ping An Group will remain as a key shareholder of the company and will continue to strongly support Autohome's long-term development.

Next, let us take an overview of the company's financials. In the year of 2024, we have successfully completed the breakthrough development of our innovative business. The total revenue of the whole year is 7.4 billion yuan. Among them, online marketing and other business income have increased by 8.1%, while revenue has risen by 33.8%. New energy business continues to maintain a strong growth trend. The annual income has increased by 55.2% in the same ratio. In terms of profits, the annual net profit of the company is RMB 20.5 billion. The net profit rate has been adjusted to 29.1%. In addition, the company has announced a total of RMB 1.5 billion per year. Last week, we also bought back an estimated $88.5 million worth of stocks. In the future, we will continue to carry out the company's board meeting to continue to strengthen the shareholder feedback through the Yilan Zenghong buyback plan.

We concluded 2024 strongly with significant breakthroughs across each of our innovative businesses. Total revenues for the year reached RMB 7.04 billion with revenues from online marketplace and others increased by 8.1% year-over-year and accounted for 33.8% of total revenue. Notably, our NEV business maintained strong growth momentum with revenues in 2024 increasing by 55.2% year-over-year. Adjusted net income attributable to older homes in 2024 reached RMB 2.05 billion, yielding an adjusted net margin of 29.1%. Additionally, we announced a combination of RMB 1.5 billion in dividends for the year, and as of last week, had repurchased approximately 88.5 million USD worth of shares. Moving forward, we've been committed to executing the board's approved dividend on the share repurchase program in hunting our shareholder returns.

In 2024, our online and offline integration and ecosystem development strategies will be in full swing throughout the year. In terms of user growth, content governance enhancement, new sales scale upgrade, and AI application promotion, we have achieved many important milestones. Let's take a look at these achievements.

Our strategic focus throughout 2024 was integrating our online-to-offline ecosystem, highlighted by significant milestones in user growth, enhances our content matrix, expansion of our new retail business, and deployment of AI applications, which were particularly successful for our innovative businesses. I'd like to take a moment to review these achievements in great detail.

First of all, Zhijia's online traffic is rising again. In December 2014, the number of daily active users reached 77 million, showing that we are the core of high-quality content. The strategy to drive user growth has always been effective. We also started cooperation with multiple Internet platforms. Through open cooperation, we have achieved the goal of breaking the circle of the user community and continuously expanding our circle of friends. Secondly, from the first QTOS space station launched in 2022 to the completion of the space station in 2023, In 2024, we will expand our sub-city satellite store. Our channel layout is expected to be perfect. Currently, the number of local stores has reached more than 150. We have achieved effective brand integration and extensive channel coverage. At the same time, we focus on the sub-city market. We held more than 1,000 fairs and hundreds of innovation and innovation exhibitions all year round. Covering more than 200 cities, we have actively promoted innovation and innovation, and the fall of the new energy policy. In terms of technological innovation, our AI has seamlessly integrated into all parts of the business. From producing content for consumers at the C-end to providing operation management and decision-making analysis support for B-end customers, it has significantly improved the productivity and operation efficiency of customers.

First, our online traffic reached new highs again, with average mobile DAU exceeding 77 million in December 2024, reflecting the effectiveness of our high-quality content-driven strategy in driving user growth. We also expanded partners with multiple internet platforms, leveraging open collaboration to engage with a broader demographic and extend our reach. Since the launch of our first autonomous space source in 2022 and the subsequent large-scale rollout at the end of 2023, and the accelerated expansion of satellite stores into low-tier cities in 2024, we've made substantial progress in building out our offline channels. The total number of franchised offline stores now exceeds 150, generating strong brand aggregation and extensive channel coverage. At the same time, we helped more than a thousand hundred cities trade-in for new auto shows in over 200 cities during the year, effectively promoting trade-in for new at the AEBs in the rural areas policies. In terms of technological innovation, we've seamlessly integrated AI across all aspects of our business. from content creation for consumers to operational management and decision-making analysis for clients, significantly enhancing productivity and operational efficiency for our customers.

Cars are an important consumer brand that has the potential to expand its consumer base. The car industry has a significant impact on China's economic growth. We will continue to establish differentiating advantages in the track of car media. Online through professional content guidance and ecological cooperation to expand traffic access to the local and regional markets. Make good user service. And use digital tools to connect the online and offline. Accurate survey of consumer needs to grasp the changes in the early stage. Establish a positive situation from the top to the bottom of the line. In the future, we will continue to aim at the business opportunities in the lower market. continue to deepen the business layout in the target area market, upgrade the business model, improve business quality, and promote the company to enter the next stage of development.

Automobiles play a crucial role in driving domestic demand and expanding consumption, making the industry vital to China's economic growth. In the automotive media sector, we will continue to build differentiated competitive advantages by diversifying and expanding online traffic through our professional content matrix and ecosystem of partnerships. We also deepen our presence in offline regional markets with improved services for users and leverage our digital tools to connect online and offline operations. By utilizing our deep understanding of consumer needs and capitalizing our opportunities to transform the industry, we are building a virtuous cycle between our online and offline businesses. Looking forward, we will continue to target the substantial business opportunities we see in low-tier markets, deepen our presence in these regions, upgrade and refine our business models, and enhance operational quality to propel our development of new heights.

Next, let's welcome Mr. Zeng Nian, the CFO, to introduce Zhijia's 24-year fourth quarter and all-year business and financial situation.

With that, I will now turn the call over to our chief financial officer, Craig Zeng, for a closer look at our fourth quarter and full year 2024 operating and financial results. Thank you, Mr. Yang. Hello, everyone. I'm Craig Zeng, the CFO of Auto Home. In 2024, we will continue to achieve results in the field of content construction. Thanks to Zhijia's professional evaluation ability and the insight into users' real-time use scenarios, we focused on the two core technical directions of new car intelligence and new energy, creating a series of professional IT guidelines that are useful to users and beneficial to the industry. In 2024, we continue to make progress in content development, leveraging our professional evaluation capabilities and a deep understanding of our user needs. we focus on two core technological areas, smart vehicles and EVs. With this in mind, we've developed a series of professional IP matrices that are both useful for users and beneficial for the industry. For example, last December, we launched a double-temperature winter handbook for new energy vehicles. It covers the three major industrial challenges of low-temperature battery life, slow charging, and high energy consumption. We focused on the reliability and comfort of the vehicle under low temperature conditions and carried out all-round testing on new energy vehicles. The test covered 51 models from 30 brands, with more than 600,000 online exposure. Multiple main engine factories actively forwarded the content of the column, showing that we have gained widespread recognition in the industry in terms of content professionalism. For example, in December last year, we launched the first winter dual-temperature test program focused on NEV. This initiative directly addresses three major industry pain points under low temperature conditions, short range, slow charging, and high energy consumption. We conducted comprehensive tests on the reliability and comfort of vehicles in low-temperature environments. covering more than 50 models across 30 brands, generating over 600 million views across various platforms. Multiple OEMs shared our content, and scoring the industry's broad recognition of our expertise in professional content creation. In addition, our content-oriented localization strategy has also landed in many city-states such as Chengdu and Xi'an. In these cities, we adopt an open platform model to create localized content channels, to integrate information such as services and discount activities for local car dealers and car-related merchants, to connect the needs of local users and local resources, and to form a comprehensive barrier from user needs, service supply, to business cooperation. This approach not only helps us to survive the downward market flow, but also establishes the basis for further expansion of our local business. Quasimodo data shows that The number of Japanese users reached 77.48 million on the mobile end of December, which is 13.6% in the same period of 23 years. This proves our leading position in the automotive media field. Additionally, our content localization strategy was successfully implemented in several pilot cities such as Chengdu and Xi'an. In this location, we adopted an open platform model to create localized content channels that integrate services and promotional activities from local automotive partners. This approach connects original user needs with local resources, forming a complete closed loop from user demand to serving and merchant cooperation. This initiative not only helps us acquire traffic from low-tier markets, but also lays a foundation for the further expansion of our regional businesses. According to past mobile data, the number of our average mobile DAUs in December 2024 reached 77.48 million, an increase of 13.6% from the same period in 2023, reflecting our leading position in the automotive media vertical. In the field of new energy, in the fourth quarter, our new retail business focuses on strengthening the operation of online live broadcasts and offline activities. Online, we build exhibition halls and full-size warehouses in the space station, and through live broadcasts, we improve the localization of e-sports. Offline, we use multi-brand real-time car resources to create special sales meetings to allow users to choose cars to save money and buy cars to save money. We see and the growth of the KOS account has led to a significant increase in the number of leads and sales compared to the previous quarter. Currently, we have established 28 space stations and more than 130 satellites nationwide. We are also happy to see that the total revenue of the new energy brand in the new energy market continues to rise. Turning to NEVs during the fourth quarter, our new retail business focused on strengthening operations in online live streaming and offline activities. Online, we utilize its exhibition halls and holographic cabins at auto home space stores to boost local user acquisition capabilities through live streaming. Offline, we leverage vehicles from several brands to create curated sales events that simplify the car selection process for users while making purchasing more cost effective. We also observed rapid growth in new media matrix accounts and key influencer accounts related to new retail in the fourth quarter, driving significant growth in both leads and transaction volumes on a sequential basis. To date, we have established 28 franchised auto home space stores and more than 130 satellite stores nationwide. We are also pleased to report that total revenues from NEVs during the year, including those from the new retail business, increased by 55.2% from last year, reflecting its huge growth potential. In addition, as China's largest automotive Internet platform, we actively respond to the country's policy of resuscitation. On the one hand, we use the online platform to implement integrated policies, subsidies, and manufacturer-approved discounted discounted information to provide users with a one-stop discounted information survey and full automatic matching, and drive the car to update and change needs, and speed up release. On the other hand, we are currently conducting a series of 100-city change-up activities, including product service into three or four-line cities, focusing on the downstream market, creating trading scenarios, In addition, as China's largest automotive internet platform, we actively support national trade-in policies. We aggregate subsidies, policies, and promotional offers from manufacturers in real time through our online platform, providing users with a one-stop service for discount information and automatic matching of benefits that accelerate demand for vehicle upgrades and trade-ins. Moreover, we organized the 100 Cities Trade-In for New series of offline auto shows to bring our products and services into third and fourth tier cities. By focusing on these low-tier markets, we create transaction scenarios and facilitate the implementation of Christian for New and the NEB policies in rural areas. In 2024, we hosted nearly 1,000 offline auto shows covering almost 250 cities nationwide, with over 80% of them in low-tier cities. In the digital field, in the fourth quarter, we focused on promoting the product's AI upgrade especially for car dealership member products. For example, our AIGC video generation tools have modular graphics and video production capabilities, which greatly enriches the form of content presentation, enables business content creation, and improves content production capacity. At the same time, we support the distribution of content to multiple mainstream news platforms, which significantly improves the operating efficiency of retailers. We also integrate core products into the electronic operating process through AI intelligent bodies. For example, In the field of clue operation, AI smart tracking provides marketers with a full chain of tracking plans and tools from invitations to transactions, which increases the efficiency of e-commerce employees' problem-solving efficiency by more than 20%. In the field of management management, AI controls store management data and standardizes complex business analysis processes. Managers can quickly obtain the desired results through dialogue with AI and guide management decisions. These upgrades not only indicate content creation and distribution efficiency, It has significantly improved the operation and management efficiency of the market. On the digital front, during the fourth quarter, we prioritized AI-driven upgrades for our products, particularly for lead substitution package services. For example, our AIGC Video Generation 2 now features modular graphics and video production capabilities that greatly enhance the format of content while empowering dealers to create high-quality content efficiently. Additionally, it also supports one-click distribution of content across multiple mainstream media platforms, significantly improving operational efficiency for dealers. We also integrated AI into core products for dealership operations. For example, in lead management, AI-driven smart follow-ups provide dealers with comprehensive strategies and tools for managing leads from initial contact into the transaction, improving store staff's ECU resolution efficiency by over 20%. In business management, AI incorporates each source operational data and standardizes complex operational data analysis process so that managers can quickly obtain insights to guide their decision making. These upgrades not only enhance the efficiency of content creation and distribution, but also significantly improve operational and management efficiency of dealerships. In 2024, on the one hand, we will strengthen digital applications to provide users and customers with a series of digital search tools and other marketing tools, including car frames and car prices, to improve user experience and customer management efficiency. On the other hand, we will continue to increase the knowledge and ability of car owners, especially car owners in Chengxin, to promote car quality improvement and assist in the development of the industry. The number of car owners in Chengxin has increased by nearly three-thirds over the year. In the future, we will continue to strictly control costs, optimize operating efficiency, and ensure the stable development of our business. For our used car business, in 2024, we enhanced digital applications, providing users and clients with a broad range of digital inquiry and other marketing tools, such as vehicle condition and pricing, to enhance the user experience and improve client operational efficiency. We also continue to strengthen vehicle sourcing, particularly for certified high-quality vehicles to ensure vehicle quality and promote the healthy development of the industry. Over the year, the number of average daily certified vehicles on our platform almost doubled compared to the previous year. Moving forward, we'll continue to focus on strict cost control while optimizing operational efficiency to ensure the stable development of our business. Before discussing the specific financial details, I think you have already noticed that with the improvement of the car market sales, the income of the four-level media service has also decreased significantly. Looking forward to a new year, we look forward to the further improvement of traditional business and will continue to carefully invest resources in the field of innovative business to achieve the two goals of business expansion and financial stability. Before discussing the specifics of our financials, I believe everyone has already noted that The decrease in our media services revenues during the fourth quarter narrowed significantly on the back of an improving auto sales market. Looking ahead to the new year, we hope to see our traditional businesses continue to stabilize and recover as we continue to prudently invest in innovative growth initiatives in order to achieve our new objectives of business expansion and financial stability. I would like to explain to you the main financial situation in the fourth quarter and the whole year of TTC in 2024. Please note that in today's discussion, I will only use RMB as a currency unit, unless there is another explanation. In the fourth quarter, the total revenue was 17.8 billion yuan, In summary, the media service income is 4.37 billion yuan, the lead service income is 7.58 billion yuan, the online marketing and other income is 5.88 billion yuan, and the net growth is 3.3%. Net revenues for the fourth quarter were 1.78 billion. Breaking it down, media services revenues were 437 million, least generation services revenues were 758 million, and online marketplace and others revenues were 588 million, up 3.3% year-over-year. On cost, cost of revenues in the fourth quarter was $420 million. compared to 368 million in the first quarter of 2023. Gross margin in the first quarter was 76% compared to 80.8% during the same period of 2023. In terms of operating expenses, sales and market expenses for the fourth quarter were 7.18 billion yuan, and 7.3 billion yuan in the same period in 2023. Development expenses were 3.28 billion yuan, and 3.56 billion yuan in the same period in 2023. Turn into operating expenses, sales and marketing expenses in the fourth quarter were 718 million compared to 730 million in the fourth quarter of 2018. Product and development expenses were 328 million compared to 356 million in the first quarter of last year. General and administrative expenses were 131 million compared to 157 million during the same period of 2023. In general, the fourth-level operating profit of Car Home was 2.32 billion yuan, and the same period of 23 years was 3.67 billion yuan. The adjusted net profit was 4.87 billion yuan. In 2023, the same period was 5.03 billion yuan. Overall, we delivered an operating profit of 232 million yuan in the first quarter, compared to 367 million yuan for the same period of last year. Adjusted net income attributable to auto homes was 487 million yuan in the fourth quarter, compared to 503 million yuan in the corresponding period of 2023. In the fourth quarter, the adjustment of the basic and corruption of the U.S. stock net profit was 1 yuan, and in the same period in 2023, it was 1.04 yuan. In the fourth quarter, the adjustment of the basic and corruption of the U.S. stock net profit was 4.02 yuan and 3.99 yuan respectively, and in the same period in 2023, it was 4.15 yuan and 4.14 yuan respectively. Non-GAAP basic and diluted earnings per share in the first quarter were both 1 compared to 1.04 in the corresponding period of 2023. Non-GAAP basic and diluted earnings per ADS in the first quarter were 4.02 and 3.99 respectively compared to 4.15 and 4.14 respectively in the corresponding period of 2023. Next, I will briefly summarize our 24-year annual business situation. The total revenue is 70.4 billion yuan, of which the service income of each service is 15.2 billion yuan, the service income of the clue service is 31.4 billion yuan, the online marketing and other income is 23.8 billion yuan, and the growth rate is 8.1%. The adjusted net profit of those belonging to the home of the car is 20.5 billion yuan, and the adjusted net profit rate of the whole year Now, I'll briefly summarize our 2024 full year results. Total revenues were $7.04 billion, of which media services revenues were $1.52 billion. Least generation services revenues were $3.14 billion. and the online marketplace and others revenues were $2.38 billion, an increase of 8.1% year-over-year. In addition, we delivered an adjusted net income attributable to Aldo Home of $2.05 billion with adjusted net margin of 29.1%. As of December 31, 2024, our asset debt table continues to perform strongly The total amount of cash and short-term investment is 233.2 billion yuan. The cash flow from the financial activities in 2023 and 2024 is 13.7 billion yuan. As of December 31, 2024, our balance sheet remains robust with cash, cash equivalent and short-term investments of $23.32 billion. We generated net operating cash flow of $1.37 billion in 2024. On September 4, 2024, within 12 months of the approval of the Board of Directors of the company, a total of less than $200 million of new stock acquisition and resale plans By February 14, 2025, we have already repurchased about 3.3 million US stocks. The total amount is about $88.5 million. On September 4, 2024, our board of directors authorized a new share repurchase program under which we were permitted to repurchase up to $200 million of Autohomes ADS for a period not to exceed 12 months thereafter. As of February 14, We have repurchased approximately 3.3 million ADS for a total cost of approximately $88.5 million. The above is our financial summary. With that, we are ready to open the Q&A session. Operator?

Thank you. We will now begin the question and answer session. To ask a question, please press star 1 1 and wait for a name to be announced. If you'd like to cancel your request, please press star 1 1 again. The first question comes from the line of Thomas Chong of Jefferies. Please go ahead.

Thank you for your question. I have two questions. The first question is about the acquisition of Kuala Lumpur. What is the purpose of this transaction? What impact will it have on our future business operations? In which aspects will we expand our cooperation? The second question is about the recovery of the car in the fourth quarter. What impact has the recent car policy had on our industry and the car industry? So thanks, manager, for taking my question. I will translate my questions. So I have two questions. Firstly, it's for the transaction with CarTax. So what's the background and the purpose of this transaction and how it will impact our business in the future and in what areas plan to cooperate? And my second question is, we saw the recovery in the fourth quarter in 2024. So how's the reason the positive policies will impact auto market and auto home? And what's the management outlook for the auto market in 2025? Thanks.

Thank you for your question. I'm Yang Song. First of all, we can't comment on Hire's investment decision. But we believe However, the Karthus strategy is based on a wide range of considerations.

Thank you for the question. My name is Yang Song. Firstly, we cannot comment on higher investment decision making, but we believe that higher Karthus strategic shareholding in auto home is a decision based on multi-faith consideration.

According to the release of the news article, As China's leading online service platform for car consumers, the company uses data and technology as core support. It has a wide user base, deep industrial dynamics and professional use, as well as a powerful host market, economic and commercial network, and stable financial system. Hire's strategic entry into the stock market is a recognition of the business model and market potential of the company, and it will also contribute to the long-term development of the company.

As you know, stated in a news release by Hire, as China's leading online service platform for automotive consumers, AutoHome takes data plus technology as its core support, and it has a wide user base. In-depth industry insights, professional content, as well as strong networks of vehicle manufacturers, OEMs, and the dealers. and a stable financial system. Higher strategic shareholding reflects its corrective mission of other homes' business model and market potential, and will also inject vitality into the long-term development of other homes.

In the future, we will continue to consolidate the development of current businesses as a key source of income for the car industry. At the same time, using the advanced management experience and the operating system of Cartex to further promote the company's innovation and growth and better serve each user.

In the future, as a key hub in Hire's automotive industry ecosystem, Autohome will continue to consolidate and develop its existing business, and at the same time, draw on Hire's advanced management experiences on the Cortex operating system to further promote the company's innovation and growth, with the aim to better serve every user and customer.

At the same time, Haier will take advantage of its technological innovation with interactive tea, consumer service system, single-person unified management model, etc. The leading advantage is to integrate Carthage's online and offline integrated operation, especially the advanced door-to-door management experience. Full-face-to-face car home and in the field of user in-depth experience, smart hardware connection, and new car sales. continue to strengthen the O2B smart interaction and comprehensive operating service capabilities.

At the same time, Hyowa utilizes its leading advantages in technological innovation, user insights, consumer services systems, and the human and order combination management model, integrating the online-offline integrated operating of CarTech, especially its advanced store management, inventory management experiences, and comprehensive Empower Auto Home. It will also develop in synergy in the field of in-depth user experience, intelligent hardware connection, and automotive new retail, and continuously strengthen Auto Home's O2O intelligence integration and interaction, and the comprehensive operating and service capabilities.

In summary, we firmly believe that by combining both resources and professional knowledge,

So overall speaking, we firmly believe that by combining the resources and the professional knowledge of the two parties, more synergy can be created, providing users with more high quality and innovative solutions.

In addition, I have a supplementary notice.

After the transaction is completed, Ping An Group will continue to be the major shareholder of Older Home and a deepened collaboration with Older Home in multiple aspects, such as after-sales vehicle services, online marketing, and support the long-term development of Older Home Together with Hire. Okay.

Okay.

Now, it would be my great pleasure to answer your second question.

This question is very good. According to official data, last year's four-level test was strong, with a sales growth of 13.2%. We believe that this is mainly because at the end of the year, there was a strong impact on the complete annual target. In addition, the end of December, part of the two-star policy deadline brought a wave of effective pull for the test sales. Help the industry to recover in the near future.

Thank you for the question. I consider this to be a great question. According to official data, the auto market performed strongly in the fourth quarter of last year, with sales volume increased by 13.2% year over year. We believe that this is mainly because approaching the end of the year, auto companies made efforts to achieve their annual goals. We coupled with the exploration of some two new policies at the end of December, it effectively boosted the auto market itself and helped the recent recovery of the industry confidence.

Zhijia, as a professional car industry platform, In order to meet the needs of the users for the two-star policy, we created a localized content channel, integrated and updated local, to save the new policy benefits, and accurately connect the users' needs with local resources. Quest Mobile data shows that in December 2024, the number of Japanese users on the mobile market increased by 13.6%, further strengthening the industry's influence. At the same time, with the failure of the test, The domestic media business has been back down with a 34% growth rate. We expect this trend to continue in 2025.

As you know, as a professional vehicle media platform in the automotive industry, we are to meet users' needs for the two new policies, which is the large-scale equipment renewal and the consumer goods trading incentive. And we do see that Auto Home has created a localized content channel integrated and updated local trading for new policies, and accurately connected user needs with local resources. According to the Quest Mobile data, shows that in December of 2024, the average daily number of mobile users of automotive increased by 13.6% year over year, further consolidating its industry influences. At the same time, with the recovery of the auto market, auto homes media business has also picked up, growing by 34% quarter over quarter. We expect this trend to be continued in 2025. Next, I would like to share with you my outlook for 2025.

In 2025, we predict that domestic test sales will increase by 2%. In 2024, the total annual sales will increase by 5.5%. Among them, the sales of new and used vehicles will increase by 20% and the penetration rate will reach 57%. We believe that the overall test structure of 2025 will be stable and good.

According to the market retail sales in 2025, it will increase by 2% year-on-year. And also, we can see that the cumulative retail sales in 2004 increased by 5.5% year-over-year, among which the retail sales of new renewable energy passenger vehicles will increase by 20% year-over-year. And the penetration rate will reach to 57%. We believe that this overall pattern of auto market in 2025 will be stable and positive, and that the following trends may be shown.

I would like to provide you with three detailed analysis.

So firstly, we do see continued favorable policies and steady growth of the auto market. Secondly, we do see the continuous growth of the renewable energy vehicle and also the emergence of the intelligent trend.

And thirdly, we do see the industry price competition will continue.

In summary, in the long run, with the continuous development of the renewable energy vehicle industry and the government's introduction of the new favorable policies to support the auto market consumption, we believe that the auto market will have strong long-term growth. And we will also continue to deepen our efforts in the new renewable energy business and to develop healthy together with the Chinese automotive industry.

That's all for my answer.

Thank you very much.

Thank you for the questions. Next question comes from Brian Gong from Citi. Please go ahead.

Thank you for accepting my question. There are two questions. The first question is, I would like to ask about Li Zhen's business. What is the current situation of the car dealership? And what potential do we think can be found in this version? The second question is about our second-hand car. How do you look at the second-hand car market in 2025? When do you expect the second-hand car industry and the company's second-hand car industry to resume? Thank you, Manager. I will translate myself. Thanks, management, for taking my question. I have two questions. First is regarding our next-generation business. How is the contract renewal situation so far? And any areas to further explore potentials for this segment? And the second question is about the outlook, 2025 outlook for U.S. car market. And when does, how much do you expect, when management expects the industry and our business to recover for U.S. car business?

Thank you. Thank you. Let me answer your question. Regarding the car dealership, as usual, we are starting at the beginning of the year, and in the first quarter, to complete most of the signings. Now the signings are very good. More than 85% of them are going smoothly. The coverage is better than last year.

Thank you very much. I would like to take your question. Talking about the renewal of the Billy Connect, actually, it started at the end of 2024, as usual, and it was basically completed after the Spring Festival in 2025. The renewal situation is very good. Actually, it exceeds 85%, which is better than previous years.

In order to achieve this, we rely on two things. One is the product upgrade. We also used the optimization of AI tools to combine the information, data, and workflow of the whole platform to improve the performance of our retailers. Secondly, we continue to maintain the advantages and influence of our brand. With the flow and resources of our users and customers, we can continue to attract a large number of customers.

Why we can achieve such success is because of the two factors. One is a product upgrade. Full-scale AI implementation is grading on platform information data and workflow. Through AI operation reduction, AI follows efficiently improvement and AI decision-making assistance. It reduces cost and increase the revenue for dealers. And secondly, the brand advantages. We have very strong brand influence, high user traffic, and also we have the optimized operating experience and a comprehensive service guarantee continuously attracts a large number of customers to renew.

You just mentioned the potential of this business. I think there are still three. The first one, as you can see, Although there are different predictions, the trend of growth in the Chinese car market is still there.

And also I want to talk about the business potential in the following three aspects. The first is the Chinese auto market. Although maybe different sources may have different projections, but we believe the overall trend would be uprooted.

So from our point of view, as long as the sales volume increases, the increase in the number of clues must also be a trend of growth. From our point of view, we think that in terms of digitalization and intelligent upgrade, there is still a lot of room to go. Especially after the appearance of new AI technology, it can help us to achieve customer image more accurately, so that the efficiency of clues will be higher, and more targeted market strategies and more accurate customer service.

If the total sales go up, the leads would also go up. That is for sure the trend. And also, we can do more on digitization and intelligent realization. For example, we can further optimize the AI technology to achieve more accurate customer portraits and personalized recommendations, helping the dealers to reach targeted customers in a more effective way. We can also analyze the user's car and using big data and AI to better achieve a more efficient targeted market strategy suggested for dealers?

On the other hand, there is still a lot of space in terms of coverage. On the one hand, in terms of market coverage, in the past, there was more focus on online cities. In the future, we will have more space to do more on the growth points of these new car markets. On the other hand, In the past, we focused mainly on the sales of new cars. But in the future, we will have more opportunities in the field of car maintenance and so on.

And also, we do see more opportunities and more coverage. In the past, our market is more focused on the big cities. And in the future, we can get into the down market, which is more at the lower tier cities and help us to achieve more customers. And secondly, in terms of the lead business, we focus a lot on new car sales. In the future, we can do more post-sales services, including the maintenance and et cetera. So in this way, we can further expand the business too.

The second question is about second-hand cars. In 2024, we saw a growth in sales in the second-hand car industry. But from what we know from the industry, Now, talking about your second question, which is about the used car business.

I should say in 2024, the used car sales increased while the profits declined. The annual used car transaction volume increased by 6.5%. However, out of the top 100 used car dealers, 49 had a single vehicle gross profit margin, which is only between 4% to 6%. And 29 had a GP margin of less than 4%.

Now, talking about why the reason of sales growth

For example, they are from the policy support. For example, the trading for new policies in the new car market has driven the replacement demand for used cars to a certain extent. And also, cross-provincial business handling under the listing of the national five emission limits has simplified the trading process, reduced the trading costs, and improved the trading efficiencies.

Another interesting point is the second-hand car of new energy. In the past, the second-hand car of new energy was a market that everyone could not see, and the volume was relatively low. In 2024, the volume of transactions broke through 1.8 million and increased by almost 48%. This is a new market that is very worth paying attention to.

One interesting part is about the renewable market used car. In the past, there are a lot of not so transparency in this market and the volume is not big. However, the transaction volume in 2024 exceeds one million vehicles, an increase of 48% year over year, which is an important driving force for the market growth.

But from that perspective, there are also some disadvantages, such as a decline in profits. The main reason for this is that the price gap between new cars and second-hand cars is a huge pressure. Because the price of new cars doesn't increase, the storage cycle of second-hand cars will be extended, and the capital will be trapped. Moreover, because the price is hard to judge, the profit margin of second-hand car sales companies will also drop.

Well, there are pros and cons. For example, the reason for the profit declining is mainly due to the price wars in the renewable new car market, which has led to large fluctuations in the purchase and the sales price of the used car, an extended inventory cycle, and a difficult capital recovery. So this single vehicle gross profit margin of used car dealership enterprises had generally declined.

Looking forward to 2025, we think that the market's storage capacity and the change of policy are the two biggest incentives. New energy second-hand cars will continue to increase as their storage capacity increases. So we think that the second-hand car industry in 2025 will continue to grow.

Now I would like to share with you my outlook for 2025. Firstly, the market. With the continuous implementation of the trading for new policy, the market demand will continue to be released. Coupled with the promotion of the renewable energy used car, the sales volume of the used car industry in 2025 is expected to continue to grow.

But in the same way, from what we're seeing now, the price range of cars this year should still be there. But we don't think the overall price range of cars this year will be as high as it used to be. It will be better than it was last year. Car manufacturers' predictions of the market may improve. In addition, we also hope that through our efforts, we can change some of the pain points in the market. The main thing is the transparency of the market price and the mining industry. So from Zhijia's point of view, we need to greatly improve the integrity of our employees. We need to use the data, tools, such as mining, vehicle price, and survey, to help our employees. So we think that the second-hand car industry is still a long-term one. We can't say that it needs to speed up, because it has been growing. But it won't be something that you expect in the short term. It may have a very strong explosive power, but it will continue to grow.

Talking about the price wall, I should say in 2025, the price wall will continue, but the volatility will be less. We do believe that that would help to improve the market. We are aiming to address the pain point in the market, for example, to enhance the transparency of the used car transaction in terms of the pricing and the condition of the car. So that's why in Auto Home, we want to promote the trustworthy used car source, which would increase significantly. So this certified and high quality car source usually has higher selling price and we help the dealers to improve the profitability. And also digital tools such as the vehicle condition and price query can effectively improve the business operation efficiency. So in this way, we believe that The overall momentum is that it will be a long-term growth of the market, but do not expect to see short-term outbursts of the rapid growth of the market.

Thank you for the questions. One moment for the next question. Our next question comes from the line of Xiaodan Zhang from CICC. Please go ahead.

Good evening, Mr. Manager. Thank you for accepting my question. My question is about our new energy business. We see that our new energy sales model has already reached a certain scale. I would like to ask Mr. Manager to share with us So thanks, management, for taking my questions. And could you please share your outlook on 2025 revenue and margin outlook for the NEV's new retail model? And how should we think of its expansion pace going onwards? Thank you.

Thank you for the question. Well, thank you very much for the question.

As you know, the renewable energy vehicle is one of the key development strategies for O2Home. And we believe that the new retail business, we would focus more on O2O, the online and offline collaboration. We believe that this would be the major driver for the future growth of the business.

Our development in the past two years has also shown the vitality of this model. In 2022, we will have only one factory in Shanghai. At the end of 2023, we had 28. In May of 2024, we started to test the satellite industry. So far, the total number of nuclear power plants in the satellite industry has exceeded 150. We are now at the initial scale, as you just said.

Actually, our past experience shows that this is a very good strategy. For example, in 2022, we only have one space store in Shanghai. By the end of 2023, we have 28 space station franchise stores. Since we started testing the seismic source in May, and also the total number of the space station and the satellite franchise station has now exceeded 150. So it can be seen that the construction of our offline channels have taken initial shape, achieving the wide coverage of the high and low tier cities.

This year, we will continue to develop our Xilinxou business according to our planned plan. We will try to go to more places, especially in the satellite market in the lower market. We will look at the profit and the speed based on what we have tried. In general, Xilinxou is not a small business. Our partners are basically in a relatively in a short period of time. So we expect that in the entire year of 2025, the proportion of new sales will gradually increase.

And this year we will continue to explore, especially in the lower tier cities. We want to have a wide coverage in the smaller and the lower tier cities. In terms of the profit, we believe the profit would be reasonable and it is not a cash burning business for the renewable and the new retail business. And we want to see that our franchisees can achieve the balance in terms of its financial recovery in balance in the short term. So in this way, our 2025 business will continue to grow.

Thank you. One moment for the next questions. Our next question comes from the line of Richie Sun from HSBC.

Please go ahead. Thank you, management, for taking my question. I want to ask how should we think about what is your view on further lifting the payout ratio or shoulder return? Thank you.

Thank you very much for the great questions.

Actually, if you look at the past three years, in 2022, we had already paid 500 million in dividend payouts. In 2023, this number reached to 1 billion RMB. And in 2024, it further reached to 1.5 billion RMB. And also, our board of directors also made a promise that in the future, in the next three years, we would pay out no less than 1.5 billion RMB.

In addition to the bonus, we will also try other ways, including repurchase. In September, the board of directors passed a $200 million repurchase plan in February. We think it will help the company's share price fluctuate and reduce the risk of investors. We have already purchased $88.5 million. So I think the bonus

In addition to the dividend payout, we also find other ways to, for example, for the share back policies to better boost our share price. It helps the investors to reduce its risk. Actually, out of these 200 million shared buyback plan, as for now, we had executed approximately 88.5 million US dollars. So in the future, in addition to the dividend payout, we will continue to do more share buyback policies and other effective ways to help to better giving back to our shareholders.

Operator?

Thank you. There are no further questions at this time. I will turn the conference back to management for closing.

Thank you everyone.

Thank you very much for joining us today. We appreciate your support to the company, and we look forward to updating you on our next quarter's conference call in a few months' time. In the meantime, if you have any questions, please feel free to contact us. And thank you for joining us today.

Thank you, everyone. Bye-bye.