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spk07: Ladies and gentlemen, good day, and welcome to Full Truck Alliance's second quarter 2021 earnings conference call. Today's conference is being recorded. At this time, I'd like to turn the conference call over to Mao Mao, Head of Investor Relations. Please go ahead.
spk00: Thank you, Operator. Please note that today's discussion will contain four looking statements relating to the company's future performance, which are intended to qualify for the safe harbor from liability, as established by the U.S. Private Security Mitigation Reform Act. Such statements are not guaranteed of future performance and are subject to certain risks and uncertainties, assumptions, and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and discussion. A general discussion of the risk factors that could affect HTA's business and financial results is included in certain filings of the company with the SEC. The company does not undertake any obligation to update its following statements, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For a definition of non-GAAP financial measures, and a reconciliation of gap to non-gap financial results, please see the earnings release issued earlier today. Joining us today on the call from STA's senior management are Mr. Hui Zhang, our founder, chairman, and chief executive officer, and Mr. Simon Tai, our chief financial officer. Management will begin with prepared remarks, and the call will conclude with a Q&A session. As a reminder, this conference is being recorded. In addition, A webcast replay of this conference call will be available on FTA's investor relations website at ir.fulltruckalliance.com. I will now turn the call over to our founder, chairman, and CEO, Mr. Zhang. Please go ahead, sir.
spk05: Hello, everyone, and thank you for participating in Full Truck Alliance inaugural earnings conference call today. On June 22, 2021,
spk00: STA successfully listed on the New York Stock Exchange, marking the start of our new journey as a public company. On behalf of STA's employees and myself, I'd like to extend our sincerest gratitude and appreciation to all our long-term and new shareholders for their unwavering support. 相信今天來參加我 們二季度財報電話會的
spk05: Everyone, in addition to wanting to further understand the performance of the company in the past quarter, we are also very concerned about the recent progress of supervision since July and our response attitude. Since the beginning of July, we have accepted the network security review of NetSense, and until today, more than a month, we have maintained continuous communication with supervision. We are currently cooperating with NetSense to promote the relevant work of network security review, including the classification of data and network security, We will continue to improve our internal operating system and protect our own data and network security. At the same time, we will further strengthen our network security system and improve our technical capabilities under the guidance of the management department. I believe many of you are joining us today not only to hear about our second quarter earnings results and achievements,
spk00: but also to learn more about our response to the regulatory developments that occurred in early July. We wanted to assure you that we have attached great importance to the cybersecurity review initiated by the Cybersecurity Review Office, or CRO, of the Cyberspace Administration of China and have cooperated fully with CRO during the review process. In addition, we also conducted a comprehensive self-examination of any potential cybersecurity risks and are committed to continuously improving our cybersecurity systems and technological capabilities. New user registration for our Yumanman and Huochiabao apps remains the same in China, but the apps are operating normally for existing users. In line with our commitment to safeguard national security and public interest, we will spare no effort to fulfill our corporate and social responsibilities and actively promote the implementation of relevant cybersecurity policies.
spk05: Thank you. The performance behind it is from a strong increase in the support of operating data. In the second quarter, the turnover of GTV reached 7.4 billion yuan, which increased by 57.8%. The turnover of orders increased to 36 million yuan, which increased by 87.9%. In the second quarter, the average turnover of goods and services reached 1.53 million yuan, which increased by 40.3%. We quickly increased the operating and financial indicators.
spk00: Now turning to our second quarter earnings results. As we present our results for the first time as a public company, we are pleased to report a solid second quarter performance, positioning us for a promising year. Our total net revenues doubled from the same period last year to RMB 1.12 billion. We continued to prove our platform's ability to generate profit on a non-GAAP basis. As we adjusted, net income reached RMB 99.5 million, compared with the net loss of RMB 39.14 million in the same quarter last year. These results were driven by an 87.9% year-over-year increase in fulfilled orders, which came in at 36.0 million during the quarter, coupled with continued improvement in user engagement where average share per MAU grew by 40.3% to 1.53 million, bringing our gross transaction value, or GTV, to RMB 74.0 billion, 57.8% higher than what we had in the same period of 2020. The quick growth and consistent strength across our business attached to our ability to successfully manage our rapid expansion as we lay a solid foundation for long-term profitability.
spk05: Next, I would like to talk about what kind of work Manbang R1 has done in terms of increasing platform size and service users and what new attempts have been made. With Manbang R1, we continue to bring higher matching efficiency to users through the leading intelligent algorithm and data for the industry. At the same time, our avoidance model has also achieved initial success. Behind the continuous growth of GTV size, there is a significant increase in the effect of size, continuous optimization of user experience, and continuous improvement of user experience. With that overview, I would like to update you on the scale of our platform, user behavior, and new initiatives.
spk00: as well as draw your attention to certain trends we are seeing in our core business and how they fit into our long-term strategy. Starting with our platform, our cutting-edge logistics infrastructure and innovative proprietary technology are becoming increasingly advanced, as proven by high fulfillment rates in the second quarter, reaching approximately 30% compared with 17% in the same period last year. This remarkable improvement demonstrated our ability to quickly and seamlessly analyze and process data on both the shipper's and trucker's end, our deep understanding of supply and demand, and our steadily improving matching efficiency.
spk05: From the user structure, as the platform size and effect acceleration expand, we see the increase in the number of customers in the recently added goods, which shows that customers are more and more dependent on the platform. During the second quarter, we witnessed an increasing proportion of direct shippers on our platform, which changes our ability to improve the freight matching efficiency and provide high-quality solutions, among other things.
spk00: Going forward, we expect direct shippers to contribute more significantly to our increasing traffic as we benefit from the powerful network effects amid continued growth for our platform.
spk05: In terms of user behavior, our user group has continued to grow in the second quarter, and has maintained a relatively high level of activity. This quarter, the average number of goods delivered has reached 1.53 million, which has increased by 40%. and the number of delivery orders and delivery orders are also growing. Our customers and drivers have a large number of diversified and complex non-standard needs, and we have solved the user pain points in addition to the purchase matching for these customers and drivers, as well as the comprehensive service of all aspects. In addition, the improvement of the reservation rate has also contributed to the improvement and promotion of the user annuality. In the second quarter, the average flow of customer members on the platform for 12 months has also reached more than 85%.
spk00: As previously mentioned, the average shipper MAUs reached 1.53 million during the second quarter, increasing 40.3% year-over-year. We also experienced sustained growth in the number of truckers for building shipping orders and truckers actively negotiating or bidding for shipping orders in the second quarter. Shippers and truckers have diverse, complex, and often highly nonstandard needs, and we cater to these by providing comprehensive logistics and value-added service. This contributes to better service quality and a higher transaction fulfillment rate, helping us achieve a strong record of shipper retention. For example, the 12-month retention for our paying members remains stable at above 85%.
spk05: We will always place the value of user experience as the number one priority. We believe that we can provide users with a high-end service system We believe our long-term success depends on our ability to continuously improve service quality and address users' pain points.
spk00: capabilities that also form the cornerstone for fulfilling our corporate and social responsibilities. We are committed to protecting the interests of all our platform users and are continuously refining features and functions on our platform to improve and promote transparency, trust, and efficiency across industries.
spk05: Now let's take a deep dive into our business. We generate revenue primarily from freight matching service,
spk00: which include freight listings, freight brokerage, and transaction commissions, as well as various value-added services.
spk05: First of all, the online transaction fee income is the best proof of our diversified and continuous development transformation method. It has also become an important commercial growth point for us. The second quarter's total income reached 1.6 billion yuan, which increased by 88.1%. At the end of June 2021, we have expanded our abstracting business to 60 cities, and the proportion of abstracting GTV on the entire platform GTV has also continued to rise. Whether it is the volume of delivery in these areas or the activity of users, it remains at a relatively stable level before and after abstracting. Of these, 60 abstracting opportunities have reached about 90% of the monthly flow rate. We believe that the initial success of the project in the four cities reflects the sustainability of this business. In the future, our plan will
spk00: First of all, our online transaction service is a testament to our diverse and evolving monetization capabilities. Following the excellent customer acceptance in pilot cities, we have extended this commission model to 60 cities as of June 2021. During the second quarter, we collected commissions worth RMB $160.9 million. up 88.1% from the previous quarter. Commissioned GTV as a percentage of total GTV generated on our platform continues to increase from the previous quarter. Trucker's next month retention rate in these 60 cities was stable at approximately 9%. The stable volume growth in commission areas and high trucker retention both demonstrated the sustainability of our closed-loop commission business model and indicate great comments for future expansion.
spk05: Second, platform service is the key to our long-term development, and one of the most stable income sources is the membership fee. This quarter's membership fee income growth is mainly driven by the increase in platform users and more precise marketing strategy and operation methods. It is expected that the future membership fee will increase with the increase in platform GDP, and the overall matching efficiency will increase, and the optimization of user experience will continue to grow.
spk00: Moving on to our free listing service. Notably, the membership fee from shippers remains one of the most stable revenue streams. In the second quarter, our refined marketing strategy and optimized operations yield positive results as our membership fee revenues grew in tandem with the number of users on the platform. We believe our ongoing efforts to increase gross transaction value, improve matching efficiency, and enhance user experience will ultimately boost membership fee growth.
spk05: One of our main service modes is the five-car transport. The appearance of buy-in insurance provides the owner with a more complete guarantee, eliminating a series of problems for the owner, which makes the owner more dependent on using buy-in insurance. In the future, we will continue to expand the platform as the main development goal of the buy-in insurance business, from the point of view of a large product range, to let more owners get used to driving through the platform.
spk00: Our freight brokerage service, or Marienbau, is one of our core service offerings. Marienbau aims to provide end-to-end freight matching service with a higher level of service quality assurance to shippers and solve a significant pain point for many shippers when contracting with truckers, making shippers more dependent on the use of the service. Scale and transaction volume remain our primary focus, and the core strategy going forward And we believe the MyInbox feature will spur more shippers to repeatedly use our platform to address their shipping needs.
spk05: In order to better meet the needs of the customer in addition to the service of car goods matching, and to improve the connectivity and activity of users, it is better to provide a one-stop service for the customer and the time. In addition to the whole car transportation, Manbang is also providing the delivery of list, copper, and other special types of goods. At the same time, we will further improve the value of follow-up services to a greater extent. As of June 2021, about 2.67 million users have used at least one follow-up service on all platforms. We expect that follow-up services will help to strengthen the activity and connectivity of users, and at the same time attract more partners in the industry to cooperate with us in depth to promote platform size and growth.
spk00: Lastly, to increase the user's thickness and engagement on our platform, we provide a comprehensive range of value-added service to shippers and truckers, catering to diverse and complex needs, including the less than truckload, intra-city, and special goods shipment, in addition to our full truckload services, as well as a series of value-added services. As of June 2021, about 2.67 million users have used at least one of our value-added services. We expect our value-added service to continue to improve user engagement and stickiness, which in turn will attract more industry participants to cooperate with us, forming a virtuous cycle driving the constant platform growth.
spk05: Next, let's talk about the expansion and strategic layout of this new business. As Agilent continues to promote various business on the platform, we will continue to carry out strategic investment and strategic cooperation in a selective way.
spk00: We have a clear path for advancement and expansion, while also proactively pursuing strategic investment acquisitions and collaboration, both domestically and overseas, to expand service offerings to further consolidate our leading market positions. improve our core platform capabilities, attract new ecosystem participants, and manage our business explosive well. Now I'd like to review some of our recent activities and upcoming initiatives for 2021 and beyond.
spk05: In the second quarter, we completed our investment in Plus AI or Plus, a developer of automated driving system for trucks.
spk00: along with global investors, raising a total of US$350 million. We began our investments in PLUS in June 2018 as part of our strategy of holding equity interest in complementary business and entered a strategic partnership with PLUS to develop autonomous truck driving technology. We believe autonomous trucks could potentially transform the logistics industry and result in significant savings in labor and fuel costs.
spk05: At the same time, energy is an important cost in the logistics industry, and it is also the business platform that Manbang continues to pay attention to. In the second quarter, Manbang's investment in Manbang has achieved strategic cooperation. In the future, Manbang will cooperate more closely with Manbang in the areas of energy, public logistics, layout big data and artificial intelligence and other new technologies to promote the logistics industry, improve overall operation efficiency, and bring greater service value to large enterprises and logistics companies.
spk00: Speaking of fuel costs, the constant variability of fuel price presents a material challenge for the road transportation industry. In the second quarter, SinoPAC Group Capital completed its investment in FTA and will lay out emerging technologies such as big data and artificial intelligence in the fields of energy and highway logistics. We look forward to exploring the possibilities of a more in-depth cooperation with SinoPAC as we seek to improve the overall operation efficiency in the logistics industry, while bringing greater value to more truckers and logistics companies.
spk05: We are also actively developing and strengthening the solution of logistics in the field of logistics, strengthening the link between each industry and each industry. In addition, we have designed an open platform around the suspension and steering wheel, which can be integrated into the rear of the car. In the second quarter, we will also start to cooperate with some leading logistics companies, commercial logistics platforms, and industry entrepreneurs. In the future, we hope to serve the industry better through this product. In addition, in terms of new business, we have just mentioned that we are continuously mass-producing same-store goods and retail business. Currently, we plan to run through the business model in the small range area and then spread to the whole country.
spk00: With respect to the road transportation ecosystem, we are also exploring software-as-a-service solutions for logistics to enhance our problem-solving capabilities while strengthening the ties with shippers and truckers from different sectors. In addition, in the second quarter, we built an open platform and started collaborating with leading logistics companies, product, merchandise, and other industry practitioners to better serve the industry with integrated service including switching options, logistics management, and other verified services. Furthermore, we continue to expand our intra-city and LTL shipping services during the quarter and plan to test our model in pilot cities before launching nationwide.
spk05: As a home with its own innovative technology Internet platform, we will continue to pass the second stage. broadening the data collection and mining content, forming a knowledge map and deepening user preferences, further enhancing the efficiency and efficiency of the platform's active integration. For example, our technology team has conducted in-depth analysis of the history of the world, carried out effective analysis, and optimized the pattern of matching preferences and decision-making power, in order to achieve the effect of enhancing user experience and matching efficiency. Secondly, our R&D team is constantly growing, and the talent structure is constantly being optimized. Among them, the number of core R&D specialists Our solid and steady growth would not be possible without our innovative technologies and the unique data generated by our day-to-day operations.
spk00: including rich and structured data on routing, matching, pricing, and order fulfillment. By analyzing and leveraging this valuable data, we have developed several proprietary technologies which we applied to freight matching, pricing, and truck navigation. Such data and technologies enabled us to increase the fulfillment rate and freight matching efficiency. Our R&D team continued to grow in the second quarter, and our talent structure was further optimized with the number of core R&D experts more than doubling year over year. Going forward, we will continue to recruit and retain top talent in artificial intelligence, engineering, logistics, and other disciplines to build a team that can support our long-term growth. 从此来说,我们对二季度的业绩表现是满意的。
spk05: The continuous growth of various business indicators is a solid foundation for the long-term development of the platform. In the next period of time, we will continue to expand our logistics coverage network, improve the trading size of the platform, and expand our service category to increase user connectivity and improve wiretapping efficiency. At the same time, we will continue to carry out the necessary strategic investment and cooperation. In terms of big data development, we will invest more and better predict
spk00: In summary, we had another strong quarter and we are well positioned to proceed along this growth trajectory. Building on this positive momentum, we plan to grow our logistics network, expand the scale of our platform, and widen our service offerings in the coming quarters to further drive user engagement and enhance monetization capabilities. Moreover, we will make additional investments in infrastructure, technology innovation, and data analysis to improve matching efficiency and accelerate the digital transformation of our platform.
spk05: This full-scale platform provides unlimited space for future continuous growth. From the perspective of transaction and user size, full-scale has grown into the world's largest digital goods and services platform. But we still have a long way to go. We are carrying the mission of making logistics better. Today, our vision is still to use technology to rebuild the future of logistics, making full-scale a one-stop digital goods and services platform. In the process of giving our users and society double value, In closing, I would like to reiterate that China's logistics industry has enormous potential waiting to be unleashed. Our user-centric value proposition, cutting-edge digital transaction platform and ecosystem
spk00: and strong R&D capabilities uniquely position FTA to play a leading role in the country's evolving logistics industry. Looking ahead, with a mission to make logistics better and smarter, we remain committed to shaping the future of the industry with technology. We are confident that our strategic initiatives will further support our top-line expansion and yield considerable returns in the long run. as we continue to build value for our company investors and growing community of users. With that, I will now turn the call over to our CFO, Simon Tai, to discuss our financial performance.
spk03: Thank you. I'd like to provide a brief overview of our second quarter 2021 financial results. Before I get started, I'd like to clarify that all financial numbers presented today are in RMB amounts, and all percentage changes refer to year-over-year changes unless otherwise noted. As Mr. Zhang stated, our total net revenues, mainly consisting of revenues from freight matching services and value-added services, were RMB $1,118.8 million in the second quarter of 2021, representing an increase of 100.9% from RMB $556.9 million a year ago. primarily attributable to an increase in revenues from freight matching services. Revenues from freight matching services in the second quarter of 2021 were RMB 937.6 million, representing an increase of 109.8% from RMB 446.9 million in the same period last year. As part of our freight matching services, we generate service fees from freight brokerage models, membership fees from listing model, and commission from online transaction services. Revenues from freight brokerage service in the second quarter this year were RMB 601.3 million, increased by 88.6% from RMB 318.9 million in the same period last year, primarily due to a significant increase in transaction activities amid a substantial recovery in road transportation in China post-COVID, but partially offset by a decrease in our average fee rate to attract more users to use our service. Revenues from freight listing service in the second quarter of 2021 were RMB 175.4 million, up 37% from RMB 128 million a year ago. primarily due to an increase in total paying members and increased shipper demand for our services as our business continued to expand. We started monetizing online transaction services by collecting commissions from truckers on selected types of shipping orders from three cities in August last year. In the second quarter of this year, we collected commissions in a total of 60 cities, and our total transaction commission amounted to RMB $160.9 million in the second quarter, increased by 88.1% from RMB $85.5 million in the first quarter this year. As we continue to grow our platform, we expect to achieve high monetization efficiency while bringing more value to both our truckers and shippers. Revenues from value-added services in the second quarter of 2021 were RMB $181 million an increase of 64.8% from RMB $110 million in the same period last year, mainly attributable to higher revenues from credit solutions and other value-added services. Cost of revenues in the second quarter of this year was RMB $627 million compared with RMB $378.2 million in the same period of 2020. The increase was primarily attributable to an increase in VAT-related tax surcharges and other tax costs, net of tax refunds from government authorities, which was RMB 572.4 million, increased by 73.7% from RMB 329.5 million in the same period of 2020, primarily due to an increase in transaction activities involving our freight brokerage service. As a percentage of total revenues, cost of revenues for the second quarter of 2020 decreased to 56% from 67.9% in the same period last year. Sales and marketing expenses in the second quarter of this year were RMB 236.8 million compared with RMB 71.5 million in the same period last year. The increase was primarily due to higher advertising and marketing expenses to promote new initiatives, an increase in salary and benefits expenses due to increased headcounts in sales and marketing personnel, as well as increased share-based compensation expenses. General administrative expenses in the second quarter this year were RMB $2,123,000,000 compared with RMB $343,000,000. 47.1 million in the same period last year. The increase was primarily due to an increase in share-based compensation expenses. R&D expenses in the second quarter this year were R&B 155.1 million compared with R&B 87.9 million in the same period last year. The increase was primarily due to an increase in salary and benefits expenses driven by higher headcount in R&D personnel, as well as increase in share-based comp. Our operational leverage steadily improved in the second quarter of 2021. Excludes share-based compensation and compensation expenses resulting from share repurchase. Adjusted operating expenses, which included sales and marketing expenses, G&A, and research and development expenses accounted for 41.7% of total revenue in the quarter. compared to 45.9% in the same period last year. The improving operating leverage was driven by economies of scale of our platform. Many expenses, including labor costs, are closer to fixed expenses in nature and do not increase proportionately with the growth of the platform GTV. Loss from operations in the second quarter of 2021 was RMB $2.4 billion compared to RMB $345 million. in the same period last year. Net loss in the second quarter this year was RMB $1,968.2 million compared with $297.3 million in the same period last year. We achieved profitability under the non-GAAP measures during the second quarter of 2021. Our non-GAAP adjusted operating income in the second quarter of 2021 was RMB 20.1 million compared with non-GAAP adjusted operating loss of RMB 84.1 million in the same period last year. Non-GAAP adjusted net income was RMB 99.5 million compared with non-GAAP adjusted net loss of RMB 39.1 million in the same period last year. We believe that the further improvement in our profitability proves the operational capabilities of our platform. Basic and diluted net loss per ADS were RMB 7.34 compared with RMB 1.72 in the same period last year. Adjusted basic diluted net loss per ADS were RMB 0.49 compared with RMB 0.23 in the same period last year. As of June 30, 2021, the company had cash and cash equivalents, restricted cash as well as short-term investments of RMB 26.9 billion compared with RMB 18.9 billion as of December last year. For the second quarter of 2021, net cash used in operating activities was RMB 48.8 million. Looking at our business outlook for the third quarter of 2021, we expect our total net revenues to be between RMB 1.04 billion to RMB 1.15 billion, representing a year-over-year growth rate of approximately 42% to 56.2%. This forecast reflects our current and preliminary view on the market and operational conditions, and the impact of ongoing cybersecurity review and new COVID outbreaks in certain areas of China which are subject to changes. We will fully cooperate with the Cybersecurity Review Office to facilitate its review process while we are closely monitoring these developments and will provide more updates when possible. Looking ahead, we may remain committed to continuous improvement of our service offerings to better meet diverse needs of truckers and shippers as we continue to grow our logistics network and develop a smarter logistics infrastructure across the value chain. We're confident we will further enhance our monetization capability, deliver sustainable growth, and generate value for our shareholders in the long run. That concludes our prepared remarks. We would now like to open the call to Q&A. Operator, please go ahead.
spk07: Ladies and gentlemen, we'll now begin the question and answer session. To ask a question, you may press star and then 1 on the touch-tone telephone. If you are using a speakerphone, we do ask that you please pick up your handset before pressing the keys. To withdraw your questions, you may press star and 2. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. Once again, that is star and then one to join the question queue. At this time, we will pause momentarily to assemble the roster. Our first question today comes from Ronald Chung from Goldman Sachs. Please go ahead with your question.
spk08: Thank you. Thank you, Mr. Zhang, Simon, and our team. I have two questions. I will translate them into English later. First of all, I would like to hear about the management level. In the second quarter, is there any progress in the promotion of this B ring? Including the current contract rate on the line, how much is it? And how do we further improve the contract rate in the future? The second question is that I would like to hear about our guidance on the third quarter. Because we have seen some extreme weather recently. There was a storm and typhoon before. There is an epidemic recently. Thank you, management. I have two questions. First is, did you share what is the latest progress in your closed-loop model and advancing in that in the second quarter of 2021? What is the fulfillment rate? And how do we plan to further improve this fulfillment rate into the future? And my second question would be, given the recent extreme weather, there were floods, typhoons, and the recent outbreak of COVID, and particularly in Nanjing, has that affected, say, the business volumes and operations of the business and into our third quarter revenue guidance? Thank you. Thank you very much.
spk05: Yes, I will answer the first question first, which is the question of the closed loop. The closed loop model of the second quarter platform has been further improved, and the fee rate continues to increase. The fee rate of the second quarter platform has reached 30%, and it was only 17% in the same period last year. The increase in the fee rate is because the platform has a deeper understanding of the data on both ends, including the detail of the order matching, which makes the efficiency of our matching further improve. In the second quarter, our closed-loop model was further enhanced, and our fulfillment rate
spk00: continue to increase, reaching approximately 30%. This remarkable improvement was mainly attributed, first of all, to our deep understanding of both supply and demand and the steady improvement in our matching efficiency. So going forward, we will continue to generate more structured data through our advanced big data technology, improve the standardization of order entry and refinement of data analysis, We're also launching a recommendation-based model to constantly improve the matching efficiency and enhance user experience. We expect the overall win rate on our platform to continue increasing over the next few years.
spk05: It is true that the typhoon and storm have affected some of the goods and services in some areas since the end of July. Among them, Henan Province, including some cities in Jiangsu and Zhejiang Province, are the most affected. The extreme weather this time has indeed had a certain impact on some of the regional business in the third quarter. But due to the short time of extreme weather, the business after the disaster has gradually returned to normal. So we think the extreme weather The impact on the entire business and finance is not significant. The impact of the epidemic on the three regions is currently seen in Jiangsu, Hunan, Henan, etc. Some areas have been affected by the epidemic to varying degrees. The current wave of epidemic is still in development. We will continue to monitor its final impact on the business of the three regions. As for the company, Nanjing is also an outbreak site of the epidemic. Employees also carry out So, in general,
spk00: So since late July, the typhoons and floods have impacted road transportation in some areas, including Henan and some cities of Jiangsu and Zhejiang Province, as well as Shanghai. The extreme weather had an impact on our business in some areas in the third quarter, but given the short duration of the extreme conditions, our business in the related areas has gradually recovered after the disaster. And we believe that extreme weather will not significantly impact our overall business and the financial performance in the third quarter. Speaking of the pandemic impact in the third quarter, based on our current assessment, our business in some areas of Jiangsu, Hunan, and Henan Province has been affected As the pandemic is ongoing, we will continue to monitor the impact on our business. And since the outbreak, our employees from managing office have been working from home and have been able to function efficiently with the support of our internal communication tools. Our platform is running smoothly at the moment, and all business departments are progressing as expected with no disruption to daily operations. So in keeping with our commitment to prioritize employees' health and welfare, we encourage employees to work from home and come back to the office when the pandemic is over.
spk08: Understood. Thank you, management. Thank you.
spk07: Our next question comes from Eddie Wang from Morgan Stanley. Please go with your question.
spk01: Hey, Mr. Zhang, Mr. Tai, hello, everyone. Thank you for accepting my question. First of all, I would like to congratulate the performance of the second quarter. I also have two questions. The first one is about the impact of the network security review on our third quarter user growth. Because in this situation where we can't pull new users, what methods do we take to improve the activity and flow rate of our existing customers? This is the first question. The second question is that since the second quarter has started, I have two questions. First, yes, what's the impact of the ongoing cybersecurity review on our user growth? What are the measures we have adopted to improve our user retention and increasing the engagement level of the existing users when you are not able to bring in the new users? And the second question is, do you see any impact on the transaction flow and trackers retention in the pilot cities since the commission model was put in place in the second quarter? And what is the rollout plan for your commission model in the second half of this year? And will the tightening regulatory environment impact your take rate? And what's the outlook for the take rate for the second half of this year? Thank you.
spk05: Thank you. These two questions are also very good. First of all, let's talk about the network security review. During the network security review, our new users cannot register. It will have a certain impact on the new platform. The degree of impact depends on the network security review. It takes time to stop new users. And during the pause of new users registration, our daily operation work is normal. Old users will not be affected by the use of APB. The current review is in progress. For the overall GDP and income impact of the third quarter, we will continue to monitor and evaluate. Based on the relative uncertainty of the completion of this review time, we have adopted a series of operating strategies to increase the activity of the old users, including the marketing method to activate silent users, We believe that the growth impact of network security inspection on the business is temporary. In the long term, the company's overall business strategy will not be affected by network security inspection.
spk00: Regarding the first question on the cybersecurity review, yes, that the suspension of the new user registration for our U-Mama and Ho-Chunk apps in China has an impact on the business. And the extent of the impact depends on how long the suspension will last. While there will be no direct impact on the existing users of FTA's mobile apps, With the review still in progress, we will continue to monitor and evaluate the impact on our overall GTV and the revenue in the second half of the year. And given the uncertainty around the review timeline, we are now adopting some operational initiatives to boost the activity of the existing users, which may include activating and stimulating silent users through targeted marketing, enhancing the user experience, of the registered users by streamlining the delivery process, et cetera. We believe the impact of the cybersecurity review on our business growth is temporary, and our overall business strategy will not be affected in the long run.
spk05: Right. Let's talk about the impact of the draw. Our draw has reached 1.6 billion yuan in the second quarter. By the end of June, there are already 60 cities in the city of Chouyong. And the GTV of Chouyong, which covers the entire platform, is also constantly rising. From the main operating indicators, the growth of the business in Chouyong is stable. Chouyong city's 4G traffic flow rate has reached 90%. This shows that 4G has already produced paid habits and paid wishes. and the recognition of the value of the platform by the users on both ends of the line. This proves that the model runs smoothly and can be reproduced on a large scale. Compared to the commissioning fee taken by Huangliu, the level of commissioning is very low at the moment. We believe that there is no harm to the interest of the driver. On the contrary, we provide more additional services to the driver through closed commissioning. The current commissioning is also in line with the recognition of the value of the platform for the driver users. We believe that the current commissioning rate is in line with We will continue to communicate with the monitoring institutions and check regularly. Embracing the changing monitoring environment, in the future, we will continue to implement a cautious policy of remuneration. In terms of the transaction commission, during the second quarter, we collected commissions of RMB 160.9 million in six decades, and the commission GTV as a percentage of total GTV continues to increase from a prior quarter.
spk00: In terms of the key operating indicators, we see our business growing steadily in the 60 cities, with the truckers' next month retention reaching around 9%. This signals truckers' willingness to pay a commission, reflecting the recognition of our value for both shippers and truckers, and injecting confidence into our nationwide rollout in the future. And compared with the intermediary fees charged by middlemen, we believe our mid-commission is very low. We are committed to not infringing trackers' best interests, and we provide these trackers with a series of additional limits through the closed-loop transaction. We believe this added value provided by our platform is recognized by the trackers. FTA has been paying close attention to the relevant regulatory guidelines. And we believe our current commission rate is in line with the regulatory requirements. In keeping with the regulatory requirements, with the continuous enhancement of the value of our platform and service, we see there is still room for further improvement in take rate. And we will continue to communicate with regulators, conduct self-examination periodically, and embrace the changing regulatory environment.
spk02: Our next question comes from Charlie Chen from China Renaissance.
spk07: Please go ahead with your question.
spk04: Thank you, Mr. Zhang, Mr. Cai and Maomao. Thank you for your time. I have two questions here. The first question is about the company's two new businesses. May I ask what kind of progress is the new business of Tongcheng and Lingdan in the second quarter? And what is the future plan for the investment of these two new businesses? As a whole, the new business of Tongcheng and Lingdan I have two questions here, and thanks for your time to take my question. The first is regarding the new initiatives that the company has taken. which is the Interest City and also LTL business. How's the progress in the second quarter? And how is the investment going forward? Will there be more investment? And also, how do you position this to new business in your service portfolio? And my second question is, how is the recent trend of the competition landscape in the food truckloads business, especially since second quarter? Thank you very much.
spk05: Yes, let me answer the first question, which is about the new business. In the second quarter, our progress in the copper city and retail areas is in line with our expectations. But currently, these two new businesses are still in a small-scale, small-scale trial stage. We hope to run this model better to do a larger-scale expansion. We expect that in the next two to three years, we will continue to invest in these two directions. In addition, the main purpose of our strategy when the company enters the retail and retail areas is to create a one-stop logistics service platform that is satisfied with the various needs of the existing customers. The whole vehicle transportation is more than the retail and retail. The whole vehicle transportation is more than the retail and retail. We have accumulated rich platform operation experience. Entering the new business field, this is a downward expansion, with natural advantages. At the same time, because of the high convergence and correlation between the same market and the retail business and the whole car, we think that the expansion of the new business is to save additional customer costs, which is more than enough. Therefore, from the perspective of service users and the perspective of economic efficiency, from the whole car to cut these new business is a natural extension of existing business.
spk00: Okay, regarding the first question on our new initiatives, in the second quarter, the progress in the intra-city and LTL business was in line with what was expected, though it's still in a trial period in a small area. We will only consider expanding the coverage after carefully testing the economic model, and we believe we will continue our investment in the next two to three years. We entered the intra-city and LTL fields, aiming mainly to build a one-stop logistics service platform to meet that diversified need for our existing shippers. In terms of the competitive advantage, compared with LTL and intra-city shipments, we believe that FTL shipments have higher requirements in terms of order matching, trigger management, monitoring of the whole fulfillment process. as well as offering of value-added service. And we believe that we have accumulated rich experience in platform operation and entered this new business area with a significant competitive edge. At the same time, the LTL and the intra-city shipments are highly overlapped and correlated with FTL, which helps us save additional user acquisition costs. Therefore, from the client coverage and operating efficiency perspective, I believe it's a natural extension from our existing FTR business.
spk05: Especially in the field of whole vehicle transportation, it is a more obvious position in this industry. From the scale of GTV, we are the world's largest digital freight platform. In the second quarter, our performance has maintained a continuous increase. From the earliest freight industry, we have always put the digitalization and onlineization of deep-rooted goods and vehicle components as our main goal. Currently, our platform has covered more than 70% of the country's heavy and medium-sized cards. On the other hand, we have seen that China's public logistics has reached 6.2 trillion RMB in 2020, and the penetration rate of digitized goods and services platforms is only 4%. Due to the professional national network market in which the whole car transport is a must, there is a strong natural network effect and the ratio is relatively high. Our platform has a relatively leading advantage. Currently, there is no player in the industry that can replace us, and our real competitors are the offline players. In the future, we will continue to work to further improve the platform for goods and opportunities to bring value to replace this traditional offline customer relationship, turn them into online and increase the penetration rate. In general, we think that the dry line logistics market is big enough. The current penetration rate is very low, and we also feel that there is no competition. Currently, there is a change in the current industry pattern. We also believe that In terms of the competitive landscape of the industry since second quarter, we have not seen any significant changes yet.
spk00: We are a leading worldwide digital freight platform and a pioneer in the FTL market. In terms of GTV, we are the largest digital freight platform in the world, and our business maintains strong momentum in the second quarter. Since the earliest freight listing service, we have deepened our roots in digitization. As of now, our platform covers more than 70% of the heavy duty and medium duty truckers in China. The China's road transportation market is larger than RBC trillion in 2020, while the penetration of digital freight platforms was only 4%. And FTL shipments rely on the nationwide closed-loop network. This highly complex and dynamic orchestration of millions of shipments is difficult to replicate and form a natural barrier of entry for us. Our platform has a clear competitive edge. We don't see any potential substitute or comparable players in the market for our service at present, while our real competitors are acquaintance trackers from the offline model. Going forward, we will continue to enhance our platform capabilities to bring more value to both shippers and trackers, while replacing the traditional offline acquaintance tracker model and increasing the online penetration. But overall, the road transportation market is massive, yet the current penetration is still very low. So we don't think the emergence of any potential competitors will change the existing industry landscape. And with the gradual improvement of our closed-loop model, we believe the online transaction fulfillment rate will further increase, and the network effect of our platform will become more evident. With our continuous efforts, we are confident to further augment penetration rate of digital free platforms in the future.
spk04: Thank you very much.
spk07: Our next question comes from Xin Yang from CICC. Please go ahead with your question.
spk06: Okay. Thank you. Can you hear me?
spk08: Yes.
spk06: Okay, thank you, Mr. Zhang, Ms. Cai, and Mengmeng. Your work is very good, and I also congratulate you. I have a question about this network security audit. It may include several aspects. One is, will this network security audit include any specific content? And what is the current security protection system of the company? How long do you expect the audit to last? And if we want to end this audit, So my question is about the cybersecurity review. So what aspects does this cybersecurity review cover? And how is the company's data security protection system? And how long will the cybersecurity review take? In your view, what should be done or rectified in order to successfully complete the review?
spk03: Thank you. So the main purpose of the review is to prevent national data security risk and safeguard national security and public interest. We have established a comprehensive data and network security protection system in terms of org structure, technology, and also internal processes. But based on our preliminary self-assessment, we have not found any situation or issues that may lead to direct removal of our four main apps. We will also cooperate with regulatory authorities on the review and maintain close communication with them to minimize the impact on the company's business. And given there's no precedent to follow, the actual review period and work or rectification that needs to be done will depend on regulators' actual timetable. We will fully cooperate with regulators to complete the review as soon as possible. And in future, we will continue to improve our internal operations systems and safeguard the security of our own data and network. Meanwhile, we are committed to continually improving our cybersecurity systems and technology capabilities under the guidance of the authorities.
spk06: Thank you.
spk07: Thank you. And ladies and gentlemen, with that, we'll conclude today's question and answer session. I'd like to turn the conference call back over to Maomao for any closing remarks.
spk00: Thank you again for joining us today. If you have any further questions, please feel free to contact us at Full Truck Alliance directly or TPG Investor Relations. Have a good day.
spk07: Ladies and gentlemen, that does conclude today's conference call. We thank you for joining. You may now disconnect your lines.
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