Autohome Inc.

Ladies and gentlemen, thank you for standing by for Autohome's third quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow management preparation. 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, at Autohome's IR Director. Mr. Song, please go ahead.

Thank you, operator. Hello, everyone, and welcome to Autohome's third quarter 2025 earnings conference call. Earlier today, Autohome distributed its earnings release, which can be found on the company's IR website at ir.autohome.com.cn. Joining me on today's call is our Chief Financial Officer, Ms. Craig Yanzong, Management will go through the prepared remarks, which will be followed by a Q&A session, where it is available to answer all your questions. Before we continue, please know that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Security Indications Reform Act of 1995. Overlooking statements are subject to risks and alternatives that may cause actual results to deform materially from our current expectations. Potential risks and incentives 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 application to update any forward-looking statements except as required under applicable law. Please also know that Auto Home's earnings press release and this conference call include discussions of certain unaudited non-GAAP financial measures. A reconciliation of the non-GAAP measures to the most directly compatible GAAP measure can be found in our earnings release. I'll now turn the call over to Autohome's Chief Financial Officer, Ms. Craig Yanzheng, for opening remarks. Please go ahead, Craig. Thank you, Songkai. Hello, everyone. I'm Craig Yanzheng. Thank you for attending our call today. Thank you, Sterling. Hello, everyone. This is Craig Yanzheng. Thank you for joining our earnings conference call today. In the third quarter, we will continue to promote the further deepening of the AI and O2O strategies. On the one hand, we will vigorously strengthen the integration of AI technology applications with products, drive business innovation, and enhance user experience and customer operation efficiency. On the other hand, we will continuously implement O2O platform construction, integrate online and offline resources, and optimize end-to-end experience. In the third quarter, we continue to advance our AI and O2O strategies. On AI, we significantly strengthened the integration of AI technologies with our products, fostering business innovation while enhancing both user experience and customer operational efficiency. On O2O, we continuously improved our O2O platform by integrating online and offline resources, optimizing the end-to-end user experience, and building a comprehensive, closed-loop ecosystem that spans the entire customer journey from initial traffic acquisition through transaction condition to up-sale services. In terms of AI technology applications, we have completed the full-scale upgrade of AI assistants by strengthening model capabilities In terms of AI technology applications, We completed a comprehensive upgrade of our AI assistance by strengthening model capabilities, integrating user inquiries with specific vehicle models, and expanding usage scenarios. We achieved precise matching between user queries and car models. This has created a decision-making loop of content drives engagement. Engagement leads to action. In addition, we've also introduced two new features. the AI Car Selection System, and the AI Vehicle Fort Diagnostics, providing users with more intuitive and efficient tools for their car-related needs. In September, we hosted the first global AI technology conference, not only built a high-level technology communication platform for core enterprises, but also demonstrated the advanced progress of Chinese car intelligent technology, which has contributed to the promotion of Chinese car brands. The successful inauguration of the conference also showed the professional influence of the car industry as a core media. We received the full endorsement of the five major car industry associations and the support of 14 relevant business partners. At the meeting site, the seven leading business leaders of the industrial chain gave a heavy speech. After the meeting, more than 30 car brands cooperated with the car industry, cooperated with more than 60 professional editors, technical experts, In September, we launched the first inaugural Global AI Technology Conference. This established a premium platform for technical exchange among leading enterprises, showcased cutting-edge advances in China's intelligent automotive technologies, and elevated the collective image for Chinese auto brands. The conference's success also served as a testament to AutoHome's professional influence as a trusted media platform. The conference received authoritative endorsements from five major automotive associations and was strongly supported by 14 key corporate partners. Seven top executives from leading companies in the industry delivered impact keynote speeches. Following the conference, over 30 automotive brands engaged with Autohome's official Weibo account, while more than 60 professional editors, technical experts, and PGC creators formed a multidimensional communication matrix that drew widespread attention across the industry. In terms of O2O's ecosystem construction, the launch of a pre-heating line at the new Zhijia shopping mall on September 20th marked an important breakthrough in the integrated one-stop strategy of Zhijia online and offline. In building our auto ecosystem, we self-launched our Autohome Mall on September 20, marking a major milestone and significant progress in our one-stop online to offline strategy. This initiative further improves our new retail business model through continuous upgrades and makes our model more complete. This strategy expands Auto Home's role from being a decision-making hub for car selection and research to the final car purchase and ordering for transactions, creating a fully digitalized closed loop for the entire car purchase experience, and significantly increasing the value of our traffic. Specifically, on content, we strengthened our content matrix by increasing professional depth and expanding the breadth of prospective while continuously advancing our diversified content ecosystem. In the report on domestic and foreign car shows in 2025, we combined the two lines to achieve a comprehensive coverage from global influence to local penetration. At Munich Car Show, we set up a global vision, from the core line of global first car and Chinese brand Chuhai, through high-intensity dual-language live broadcasts and video planning, to build a professional exclusive content organization. For our 2025 series of coverage, On domestic and international auto shows, we adopted a dual-track approach to achieve comprehensive reach from global influence to local penetration. At the Munich Auto Show, we took a global perspective, focusing on world premieres and the Chinese brand Goyang Global. We built a professional and exclusive content matrix through intensive bilingual live streaming and video production, then leveraged global mainstream media networks to amplify China's automotive innovation and brand recognition worldwide. At the Chengdu Auto Show, we focused on new car launches and the purchase guidance, integrating resources from 18 automakers to create auto home exclusive live streaming sessions. This provided users with an immersive auto show experience. On the first day of the auto show, we achieved 100% coverage of all new car launches. In addition to professional exhibition reports, we have also made key progress in the field of interactive ecology with content as the core of the layout. The newly established Zhijia Media Inc. is trying to build the core of the car category, with a wide range of content covering technology, tourism, and overseas. With professional and interesting PGC content, deep and comprehensive OGC information, the real UGC experience is the foundation, and a rich and diverse content system is formed. Beyond our professional auto show coverage, it made significant strides in developing a content-centered, interactive ecosystem The newly established Autohome Media MCN is committed to building a multi-category influencer matrix that centers on automotive vertical while expanding into technology, travel, and overseas content. They've also developed a rich and diverse content ecosystem that combines professional and engaging PGC content, in-depth and authoritative OGC insights, and authentic user-generated experiences that resonate. To date, we have gathered over 200 high-quality creators across multiple platforms, covering professional car reviews, technology, travel, and other areas, continuously enhancing Autohome's platform influence. According to Quest Mobile, the average mobile DAUs reached 76.56 million in September 2025, up by 5.1% from the same period last year. In the field of new energy, we focus on the needs of users and customers, and continue to build a war-like O2O vehicle ecosystem. Online, with the pre-heat of September, we are promoting the commercial city for the core of the car company to carry out trading services. Now, we plan to fully integrate the service system through the second-hand car store network and the online service system for the low-line city that can not be covered by the car company. to build a full chain of supply and service from online to offline. Based on the successful water test in September, we plan to officially launch the commercial city of Zhijia in Double Eleven. By integrating industrial upstream and downstream resources, we can provide users with a more accurate, professional and efficient purchase experience. In addition, Zhijia, which includes the total revenue of the new energy brand within the new retail, is also continuing to rise. The revenue has increased by 58.6% in the third quarter. In NEV, we continue to focus on user and client needs while building a comprehensive automotive ecosystem online centered around our newly soft-launched Auto Home More, introduced in late September, provides transaction services while our offline network of franchise stores, car tech outlets, and the used car dealerships is designated to integrate the entire process from online ordering to offline delivery and service. Building on the successful trial, we plan to officially launch the Auto Home More during the Double 11 Shopping Festival. By integrating resources from across the industry value chain, we are committed to providing users with more precise, professional, and efficient car-purchasing experiences. Furthermore, total revenues from NEVs in the third quarter, including those from the new retail business, have continued to grow increasing by 58.6% from last year. In terms of digitalization, our five digital product lines rely on Zhijia's full-term data tracking capability to continue to assist customers in improving head-on accuracy and service efficiency. In addition, at the Global AI Technology Conference, we heavily released Zhijia's Tianshu Smart Service Platform. The platform uses Zhijia's self-proclaimed Cangjie model as the technical base, and uses open tools On digitalization, our five major digital intelligence product lines are leveraging AutoHome's platform capabilities of full lifecycle data tracking, to continuously help clients improve targeting accuracy and service efficiency. Furthermore, at the Global AI Technology Conference, we officially launched the Qianshu Intelligence Service Platform. Powered by Autohome's proprietary Tangjie large language model, the platform uses an open toolkit and service distribution capabilities to redefine collaboration among users, the platform, and the ecosystem partners. This advancement drives Autohome's transformation from an automotive information platform to an industry-wide intelligent hub, further strengthening our few advantages in technology and ecosystem. As a second-hand car business, we continue to promote the standardization process of trading and service, and rely on AI inspection experts built on historical trading data and algorithmic models to achieve the leading level in the industry in terms of valuation accuracy. At the same time, We continue to advance the standardization of both transactions and services. The AI Car Inspection Expert developed based on historical transaction data and algorithmic models have achieved industry-leading accuracy in vehicle valuation. Meanwhile, our flagship certified used car stores have further expanded its network of partner dealers. In the future, we'll continue to uphold integrity and standardization as our foundation, deepen our collaboration with high-quality used car dealers, and continuously to provide consumers with a more reliable and worry-free used car buying experience. 总体而言,今年我们以AI和O2O为核心驱动, 全面加速业务布局。 未来,我们将通过持续推动产品与业务模式的双重创新, 着重致力于构建更高效的汽车生态服务体系, 为行业持续创造价值, 并助力公司实现长远稳健发展。 In summary, this year we focused on AI and O2O to comprehensively accelerate our business expansion. Looking ahead, we will continue driving innovation in both products and business models, building a more efficient automotive ecosystem and a service system that creates sustained value for the industry and ensures our long-term stable development. 我来向大家简述一下汽车之家2025年第三季度的主要财务情况。 请注意,我将在今天的讨论中仅以人民币作为货币单位,除非另有说明。 With that, now please let me briefly walk you through the key financials for the third quarter 2025. Please know that I will reference RMB only in my discussion today, unless otherwise stated. 第三季度收入总额为17.8亿元。 Net revenues for the third quarter reached 1.78 billion. To break it down further, media services revenues contributed 298 million. Least generation services revenues were 664 million. and the online marketplace and others revenues increased by 32.1% year over year to 816 million. With respect to cost, cost of revenues in the third quarter was 646 million, compared to 408 million in the third quarter of 2024. Growth margin in the third quarter was 63.7% compared to 77% during the same period last year. turning to operating expenses still the marketing expenses in the third quarter was 620 million compared to 877 million in the third quarter of 2024. Product and development expenses were $279 million compared to $339 million in the third quarter of 2024. General and administrative expenses were $125 million compared to $137 million during the same period last year. Overall, the company's third quarter sales revenue was $1.47 billion, which was $0.83 billion in the same period last year. Overall, we delivered an operating profit of 147 million in the third quarter, compared to 83 million for the same period of 2024. Adjusted net income attributable to other homes was 407 million in the third quarter, compared to 497 million in the corresponding period of 2024. Nangat's basic and diluted earnings per share in the third quarter was 0.87 and 0.86 respectively. compared to 1.02 for both in the corresponding period of 2024. Non-GAAP basic and diluted earnings per ADS in the third quarter were 3.47 and 3.45, respectively, compared to 4.09 and 4.08, respectively, in the corresponding period of 2024. As of September 30, 2025, our asset balance sheet continues to show strong performance. As of September 30th, 2025, our balance sheet remained low but with cash, cash equivalent and the short-term investment of 21.89 billion, we generated net operating cash flow of 67 million in the third quarter. On September 4th, 2024, our board of directors authorized a new share repurchase program under which we are permitted to repurchase up to U.S. dollar 200 million of auto homes ADS for a period not to exceed 12 months thereafter. On August 14, 2025, the board approved an extension of the term of this program through December 31, 2025. As of October 31, 2025, we have repurchased approximately 48 million EDS for a total cost of approximately US$146 million. In addition, according to the company's stock policy, the Board of Directors has approved the issuance of $1.02 U.S. stocks, or $0.3 U.S. stocks, or U.S. stocks, or U.S. stocks, or U.S. stocks, or U.S. stocks, or U.S. stocks, In addition, in accordance with our dividend policy, our board of directors has approved a cash dividend of US dollar 1.2 per ADS or US dollar 0.30 ordinary shares payable in US dollars to holders of ADS and ordinary shares of record as of the close of business on December 31st, 2025. The aggregate amount of the dividend will be approximately RMB 1 billion and expected to be paid to holders of ordinary shares and ADS of the company around February 12th, 2026. and February 19th, 2026 respectively. On September 30th, 2025, the company announced the approval of a cash dividend of approximately RMB 500 million. Overall, the company has fulfilled its commitment to shareholders to distribute no less than RMB 1.5 billion in dividends for the full year of 2025. Looking ahead, we remain committed to maintaining a long-term, stable, and proactive approach to shareholder returns, and we sincerely thank our shareholders for their continued strong support to the company. So that concludes our financial summary. We are ready to open up CMA session. Operator.

Thank you. We will now begin the question and answer session. To ask the questions on the phone, please press star 11 and wait for a name to be announced. If you'd like to cancel your request, you can press star 11 again. Our first question comes from the line of Thomas Chong of Jefferies. Please go ahead.

晚上好,謝謝管理層接受我的提問。 我有兩個問題。 第一個問題是想問一下公司管理層對明年中國測試如何展望。 另外一個問題是我們在Prepare with Marks也提到AI。 想問一下就是我們公司AI產品的進展如何? Thanks, management, for taking my question. I have two questions. The first question is about the outlook for 2026 auto market. How should we think about the industry trend? And my second question is about AI. We mentioned AI in our prepared remarks, so I just want to get some more color about the progress of our AI product offerings. Thank you. Thank you for your question. Thank you for your question. We hope to facilitate the policy guidance of the price station. This will help to facilitate the testing of the price station. We have also seen that 21 car companies have gradually cancelled the sale of one-off prices. First of all, the price war in the auto market has shown some signs of easing, and the automakers are accelerating their intelligent technology efforts. In recent months, multiple government agencies have rolled out intensive policies calling for the industry to end involution and provided policy guidance to ease the ongoing price war in the auto sector. So all these measures have helped to cool down the price war in the auto market. And we have also observed that over 20 automakers have gradually phased out their fixed price promotions. On the other hand, since the beginning of this year, mainstream car companies have been releasing smart driving technology-related plans to speed up the development and application of smart driving technology. The competition in the future industry depends mainly on the competition in technology. It depends on the system capabilities of smart technology integration scenarios and user needs, and on the technical advantages of being single. Since the start of this year, major automakers have successfully announced their plans for intelligent driving technologies to accelerate the adoption and application of intelligent driving. So from this, it's quite clear that future industry competition will depend more on the companies comprehensive capabilities in integrating intelligent technology, user scenarios, and the meeting user needs, et cetera, rather than any single technological advantage. So for next year, the price competition expected to shift more towards a battle of technological cost effectiveness. Fourth, we think that the new energy market is still the core of growth. Although this year you see this because of the increase in absolute volume, maybe this number is a little lower. According to the data of the Car Association, in the first nine months of this year, the penetration rate of new energy vehicles has exceeded 50% for seven months. It is mainly due to the continuation of the new energy recovery, the purchase of car subsidies, etc. and other good policies to promote the growth of market demand. In 2026, it is expected that the car market will continue to make some structural adjustments. Secondly, the NEV market still remains the core growth driver, even though this year their growth number is comparatively a little bit slower than last year. But according to the data from the China Passenger Car Association , the NEV penetration rate exceeded 50% in seven out of the first nine months of this year. So this was mainly driven by the extension of variable policies, et cetera. So we believe for next year, the overall market, auto market, expected to continue to undergo structural adjustments, which will redefine how consumers to make their purchasing decisions. At the same time, China's auto industry continues to remain under high pressure, which has been lasted so long. And this pressure includes severe overcapacity, declining profit margins, and intense or fierce market competition, et cetera. So we see both traditional automakers or dealers also undergoing such a business pressure. So confronted with both price wars and the shrinking Profit and the margin we see OEMs and dealers alive so they have raised their expectations for both online consumer acquisition and offline sales conversion efficiency. For next year, I think the following points are worth paying attention to. Looking ahead to next year, we believe the following viewpoints merit our attention. There are challenges and opportunities. We believe there are short-term challenges, but it coexists with long-term opportunities because the auto market still faces significant short-term pressures mainly stemming from the shift of the NEV purchase tax exemption policy from full exemption to half exemption and the expiration of tax incentives for the ICEs. So, combined with the price war in traditional ICEs, all such factors may further impact the auto market. Although there is such a short-term pressure, the improvement of intelligent technology Despite the above short-term pressures we just mentioned, there are still upgrades in intelligent technologies, improvements to and recovery in the market order, and if they are further supported by introduction of additional long-term policies, we believe it will still stimulate consumer demand in the auto market, and the market is expected to achieve modest and steady growth in 2026. For car manufacturers, we will continue to deepen the AI and auto strategy, as mentioned earlier. So for us, for AutoHome, we'll continue to deepen our AI and auto strategies. As I just mentioned, our one hand We will keep advancing the product innovation upgrades, accelerating the application of AI technology across content, intelligent customer services, and scenario-based services, et cetera. On the other side, we will continuously explore ways to leverage our online and offline resources to achieve integration, build a closed loop for auto transactions, and better serve our users and clients. The second question is about the progress of the company's AI products. In the area of intelligentization, we have completed the layout of many products, and have built a huge array of technology products that cover the life cycle of car consumption, and continue to promote the double improvement of user experience and customer business efficiency. The second question is our AI product progress. So in the field of intelligent technologies, we have already completed a strategic layout of multiple products build a technology product mix spans the entire life cycle of auto consumption and continuously we drive improvement in both user experience and customer business efficiency. Our AI smart assistant and second-hand car AI smart buyer are constantly upgrading. The new generation of smart assistants has achieved the transition from one question to one answer to the initiative to understand and provide links. And for our users, you know, our AI smart assistant and the used car AI smart buyer are continuously being upgraded. The new generation of the smart assistant has moved beyond simple question and answer model to proactive understanding and the link provisions. So it can automatically identify the car models and the series mentioned in the conversation and directly push product links. So it shortens the use of search process and improves decision-making efficiency. For our customers, we have set up five AI product lines that cover marketing surveys, online customers, and core business scenarios such as invitations, door-to-door operations, and second-hand cars. By using intelligent tools, we can continue to support our employees And for our clients, we have deployed five major AI product lines covering core business scenarios, such as the marketing insights, online customer acquisition, store visit invitation, dealer store operations, and the used cars, et cetera. So through the intelligent tools, we can continuously empower our business team members and to realize the full-chain digital operation. These are all dependent on our self-proclaimed warehouse model as a base for technology. For example, the second-hand car, AI smart purchase, is equipped with this warehouse model. Combined with its exclusive data assets, it can achieve high-level matching of the needs of the car users and users through accurate and efficient recommendation capabilities. And for our technology foundation, we have our own proprietary Tangjie large language model. For example, our used car, AI Smart Fire, is powered by this Tangjie engine. And besides, it is combined with Auto Home's unique data assets. So it can deliver highly accurate and efficient recommendations achieving a high degree of matching between the vehicle sources and the user needs. Currently, Autohome is comprehensively and vigorously promoting the AI-driven upgrades of the products, achieving a comprehensive transformation from the underlying architecture to application scenarios. So in the future, we will continue to deepen the integrated application of AI across multiple scenarios, using the technological innovation to drive an efficiency revolution in the auto sector in the industry. Next question.

Thank you. One moment for the next question. The next question comes from the line of Xiaodan Zhang from CITC.

Please go ahead. So thanks management for taking my questions. So can management share your outlook on the traditional business for the upcoming quarters? And also, is there any update on the shareholder return plans? Thank you.

Thank you. In the third quarter, the traditional business is still under pressure. In terms of the market, the price range is still the main priority of the market. The sum of sales has exceeded 23%. Thank you for your question. In the third quarter, we do see that the OEM promotional discount still remain at high level, and the price war has been there for so long. And the overall discount for OEMs has already exceeding 23%. So for the car sales volume and the profits, I still remain concentrated among the leading companies. So the price cutting for volume strategy has made a lot of OEMs to control their marketing budgets. Q3, although the revenue gap has decreased, the volume has been greatly shortened, which shows that the entire market For the media services revenue in Q3 still declined year over year, but the decline has narrowed down significantly. And the continued decline is mainly due to the continued pressure from the OEMs' price wars in the market. And the SQ4 approaches to the year end, and we believe OEMs is expected to maintain high professional discounts to boost their sales revenues. And they still put pressure on our media services' revenues. we do expect we will achieve a slight year-over-year decline. Sensor business. Due to the pressure on the market and the price fall, retailers continue to face financial pressure. In the first half of the year, more than half of the retailers are in a state of loss. The survival of retailers is still relatively severe. So our Sensor business For our lead generation business, because of the market inventory backlog and the inverted pricing, so dealers continue to face operational pressure. And we see that over 50% of dealers operating at a loss in the first half of the year. And that doesn't look very optimistic for their survival for many dealers. So, accordingly, our lead generation services also face some ongoing pressure in the second half of the year. However, the penetration rate of our customers remains at a good level. We also believe that if the market can change, the business situation of our customers will improve, and our traditional business will also have a chance to recover. Our media business is also stable now. On the other hand, the well-development of our innovation business is also able to address the pressure of traditional business to a certain extent. Nevertheless, our customer penetration rate still remains at a good level. Once the market and customer operating conditions improve, our traditional business can hit the bottom, rebound, and stabilize. As I just mentioned, our media segment, business segment already narrowed down, they are decreased. And on the other hand, our innovative business developed quite strong, quite well. So to some extent, it's offset the situation of our traditional businesses. The next question is about the return of shareholders. What are the plans for the company to update? On the... shareholder return, you know, on dividends today, we just announced a cash dividend of RMB 1 billion for the second half of this year. And combined with the RMB 500 million we announced in September, you know, we have fulfilled our commitment to a total annual cash dividend of no less than RMB 1.5 billion for the whole year of 2025, you know. our board of directors will continue this stable dividend policy. On the share repurchase program, of the US dollar, $200 million Share repurchase program, you know, until today, we have completed over 70%. And the overall execution of this program is progressing quite well. So in the next few months, we will continue to carry out the remaining share repurchase program. The company has been working hard to build the share repurchase program, which is the core of the share repurchase program. to provide the shareholders with a stable income guarantee. In the long run, we are very confident in the company's business. In the future, we will continue to adhere to a long-term stable and positive shareholder return policy. Thank you for your support for the company in the long run. For a long time, we have been committed to building a comprehensive shareholder return plan centered on the continuous dividends and the share repurchases. providing shareholders with predictable and stable shareholder returns. Over the long term, we are very confident in our business operations in the future. So we will continue to uphold our long-term, stable, and proactive approach to shareholder returns. We sincerely thank all shareholders for their longstanding, strong support to the company. Operator?

Thank you. Thank you for the questions. One moment for the next question. The next question comes from the line of Richie Sun from HSBC. Please go ahead.

Good evening, Director Sun. Thank you for answering my question. I have two questions. The first question is about the company's interest rate. Why is there a decline of the same ratio and the same ratio in the third quarter? And how do you look at the future trend? The second question is, I would like to ask about the development of the New Energy Space Station and the satellite industry. And what will be the goal of 2026? Thank you, management, for taking my questions. So I have two. First of all, the gross profit margin has been dropping year on year and queue on queue in the third quarter. So why is that, and what is the trend going forward? Secondly, I want to ask about the energy space stores and satellite stores. So what is the development progress and the 2026 target? Thank you.

Thank you for your question. Since the beginning of 2025 this year, in order to accelerate the development of our new innovative businesses, we have been actively expanding in, we have been actively, you know, developed our business and so it increased our upfront investment and consequently it resulted in higher costs. To be specific, the expansion of innovation and innovation in the Q3, such as the new retail stores, in September to test the online and offline all-in-one business model. This business model is still in the early stages of development. We think the overall market response is positive. We have also added some investments in related areas. We think these investments are necessary for the company to develop new growth paths. Specifically, you know, our innovative business such as the new retail business has scaled up in the third quarter as compared to the same period last year. For example, we self-launched an auto home mall business in September. And although this model is quite early, it's early stage, but we observed where we get quite positive market feedback. And we believe such staged investments is quite necessary for our future development, for our, you know, to explore new avenues of growth and create much greater room for future development. So the growth margin of our transaction business, it cannot be, of course, it cannot be compared for our, you know, traditional business. For example, the media business and the lead generation business is much lower than our traditional business. So going forward, we'll adhere to our consistent practice of the strict cost controls and we'll uphold the prudent principles in managing the scale of our investments. So we'll pay attention to our gross margin change. We'll focus on that. The second question is about Autohome Space Station and the satellite stores development, the development of our offline network always centered on using our digital technology to streamline the car purchasing process and improve the transaction efficiency. So our advantage is our ability to cover areas in low tier markets where OEMs or dealers, So we can help them to expand their sales network. So this business model is also being continuously upgraded and iterated, as I just mentioned, We are integrating the online and offline resources, bringing our online technology and the traffic advantages to offline. So we try to transform from an auto content-oriented platform to a transaction service platform. After the big shareholder transaction, the new big shareholder has a relatively rich experience in the offline world. So we will also combine their advantages After we complete the controlling child holder, we will continue to work on combining our online and offline efforts to provide platform services that are more convenient and efficient, and we try to find new ways to grow beyond our traditional business models.

Thank you for the questions. One moment for the next question. Our final question comes from from CT. Please go ahead.

I will translate myself. The used car market seems still a little bit weak recently. How does management view the outlook for used car market ahead? Thank you.

Thank you. Since the beginning of the year, the second-hand car has been in a state of rising and falling this year. According to the statistics of the traffic association, in the first half of the year, the total amount of transactions of second-hand cars has increased by 2%, but the price of trading has dropped by 12%. The market structure also shows two characteristics. One is the increase in the activity of traffic across the region. The other is the rapid rise in the amount of transactions of new energy second-hand cars. Thank you for your question. Since the beginning of this year, the used car market has generally shown a trend of rising transaction volume and the falling prices. According to China Automobile Dealers Association, CADA, for the first half, the transaction volume for used cars rose 2% year over year, while the average transaction price decreased by 12% year over year. At the same time, we see there are two notable structural trends emerged in the market. First is the increased cross-regional flow. Second is the rapidly increasing NEV used cars sales. At the same time, the business pressure in the industry has not decreased. Due to the impact of the test price debt, the loss of second-hand car companies has expanded by more than 70%. The average storage period is still extended. The cost of customers is still very high. The competition is also very similar. However, we also see some positive factors. For example, the policy of saving and replacing has also activated the demand for replacement. It has sent more high-quality drivers to the market. The second-hand car of new energy sources has also officially become an important engine to pull the growth. The Car Transport Association predicts that the total amount of second-hand car transactions this year is expected to exceed 20.5 million. While the transaction volumes are expanding, the operational pressures in the industry continue to intensify due to the impact of price wars in the auto market. We see the proportion of loss-making used car companies has expanded to over 70%, with leavening average inventory cycles continued high customer acquisition costs and intensified homogeneous competition, et cetera. But despite this, positive factors do remain. For example, the trade-in policies have stimulated replacement demands and brought more high-quality used cars into the market, with the new energy used car becoming a key growth engine. So the CADA forecast For the full year, the used car transaction volume could exceed 20.5 million units, an increase of 4% to 5% year-over-year. The current second-hand car industry has entered a critical stage of deep adjustment and re-improvement of value. The negative impact of the one-car exchange model is also gradually appearing. However, China's car market has a huge supply and demand and the resilience of consumption has provided strong support for the long-term development of the second-hand car industry. Car manufacturers will also continue to work with industry partners to actively respond to challenges through detailed operations and service upgrades, explore new trends, explore new values, and drive the second-hand car industry towards high-quality development. Currently, the used car sector has entered a crucial stage of deep adjustment and value chain reconstruction. The negative impacts from the price cutting for volume model are gradually becoming apparent. However, China's large vehicle ownership base and a resilient consumer demand provide strong support for the middle to long-term development of the used car industry. So, Auto Home will continue to collaborate with industry partners to actively address challenges through refined operations and a service upgrade, exploring new business models, unlocking new value to advance the used car industry towards high-quality development.

Thank you. There are no further questions at this time.

I'll turn the conference back to management for closing remarks. Thank you very much for joining us today. We appreciate your support. I look forward to updating you our next quarter's conference for 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.