Autohome Inc. (NYSE:ATHM) Q4 2023 Earnings Call Transcript
Autohome Inc. (NYSE:ATHM) Q4 2023 Earnings Call Transcript February 6, 2024
Autohome Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Ladies and gentlemen, thank you for standing by for Autohome's Fourth Quarter and Full Year 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow management's prepared remarks. As a reminder, this conference call is being recorded. If you have any objections, you may disconnect at this time. A live and archived webcast of the earnings conference call will also be available on Autohome's IR website. It is now my pleasure to introduce your host, Mr. Sterling Song, Autohome's IR Director. Mr. Song, please go ahead.
Sterling Song: Thank you, operator. Thank you. Hello everyone and welcome to Autohome's fourth quarter and full year 2023 earnings conference call. Earlier today, Autohome distributed its earnings release, which can be found on the company's IR website at ir.autohome.com.cn. Joining me today on today's call are Chief Executive Officer, Mr. Tao Wu; and Chief Financial Officer, Mr. Craig Yan Zeng. Management will go through their prepared remarks, which will be followed by a Q&A session, where they will be available to answer all your questions. Before we continue, please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include but are not limited to those outlined in our public filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange. Autohome doesn't undertake any obligation to update any forward-looking statements, except as required under applicable law. Please also note that Autohome's earnings press release and this conference call include discussions of certain unaudited non-GAAP financial measures. A reconciliation of the non-GAAP measures for the most directly comparable GAAP measures can be found in our earnings release. I will now turn the call over to Autohome's CEO, Mr. Wu for opening remarks.
Please go ahead, Mr. Wu.
Tao Wu: [Foreign Language] Thank you, Sterling. Hello, everyone. This is Tao Wu, CEO of Autohome. Thank you for joining us in our earnings conference call today. [Foreign Language] We delivered solid operational and financial results in 2023 with overall growth driven primarily by our new businesses. Total net revenues for the year grew by 3.5% year-over-year to RMB7.18 billion. Revenues from the online marketplace and others business increased by 14.6% year-over-year and accounted for 30.6% of total revenue. Notably, we continue to see strong growth in revenues from data products and TTP, which each increased by more than 10% compared to 2022. We also saw robust growth in our NEV business with revenues for the year increasing by over 80% year-over-year and accounting for nearly 18% of total revenue.
Adjusted net income attributable to Autohome for the year was RMB2.16 billion with an adjusted net margin of 30.1%. We also completed a US$200 million share repurchase program and significantly increased the dividend payout to shareholders, demonstrating our commitment to generating returns for investors. [Foreign Language] In 2023, we made breakthroughs in the application of AI and large language models and innovative new business model. We launched new AI-driven data products, deployed large language models in various business scenarios, and combined model-based decision-making with human expertise to enhance the service quality of our data products. We also made rapid progress in spending our physical new retail presence, particularly in mid- to low-tier cities, where we see significant potential for growth as the NEV market evolves.
Our Autohome Energy Space stores as a strong offline channel to complement our online capabilities are now present in 20 cities across the country, helping us build brand awareness among NEV users. [Foreign Language] Autohome has always been at the forefront of digitalization and business innovation proactively promoting and leading the digital transformation of the entire automotive industry in China. Looking ahead, we are committed to maintaining our leadership in these key areas and creating unique advantages through the following strategies. First, we will accelerate the collaboration with Ping An Group and the focus on creating a closed loop ecosystem for car owners and leveraging Ping An's resources to enhance our service capabilities.
Second, we'll enhance the quality of our content and reinforce Autohome as the go-to-brand for all-things-automotive, creating a strong and lasting brand image as the leading authority in this space. Third, we'll put users at the center of our efforts, providing convenient access to high quality, comprehensive services throughout the entire car ownership lifecycle. Fourth, we will deepen our innovative business models focusing on developing our Autohome Energy Space stores and TTP. We believe that by aggregating industry resources, leveraging Ping An's potential business opportunities and the user resources, we can create a unique value proposition and establish a diverse and dynamic ecosystem that empowers our long-term growth. [Foreign Language] With that, I will now turn the call over to our Chief Financial Officer, Craig Zeng for a closer look at our fourth quarter and the full year 2023 operating and financial results.
Craig Yan Zeng: [Foreign Language] Thank you, Ms. Song. Hello, everyone. I am Craig Zeng, the CFO of the Autohome. [Foreign Language] In 2023, we made user experience our core focus, creating a comprehensive system encompassing content, tools and services to provide our users with high quality, convenient and efficient auto consumption experiences. [Foreign Language] In the fourth quarter we launched NEV Breakthrough Plan, a comprehensive evaluation program that assesses NEV’s safety across the three dimensions: collusion, battery and intelligent driving, this program which aims to address user concerns and accelerate the decision-making process has received 325 million impressions and over 200 million views across the entire network.
Additionally, we launched NEV Super Test, a program which carries out real-world evaluation of NEV performance over a period of two months. This initiative give us the opportunity to collaborate with other parties on developing a more consumer-centric vehicle evaluation system, promoting the overall NEV category and helping automotive brands develop strong products with a better user experience. Looking ahead, we'll maintain our focus on catering to the evolving needs of users so that we can create a rich and diverse content ecosystem that provides value and drive engagement. We will also leverage a broad range of online channels to ensure that our high-quality content reaches the widest possible audience. According to QuestMobile, our mobile DAUs increased by 25.4% year-over-year to reach 68.19 million last December, demonstrating the effectiveness of our content-based user growth strategy.
[Foreign Language] Our NEV business has grown rapidly with the expansion of the Autohome Energy Space to 20 cities across the country. We've upgraded our brand, technology and store services to provide a high quality consumer experience across regional auto markets in east, south, southwest, and north China. We've also increased the number of energy space brand partners and expanded our offering of 3D holographic car models to include over 70 mainstream models. We remain been optimistic about the potential of this new retail model, which is distinguished by its cross brand and digital approach. Looking ahead to 2024, we plan to fully expand our footprint by opening franchise stores in around 30 additional cities. By the end of this year, our NEV service ecosystem will have a presence in around 50 cities, allowing us to provide a comprehensive range of high quality, one-stop automotive service experiences to consumers across the country.
For full year 2023, our revenue from NEV brands increased 81.6%, demonstrating the strength of our offerings in this area and our ability to outperform industry sales growth rates. [Foreign Language] We also made significant progress in our digitalization efforts in 2023 as we applied AI technology and large language models across a wide range of our products and services. We launched products such as cloud smart selection and [indiscernible] which leverages our AI technology and big data capabilities to help dealers engage with high value users and manage instant messages with users in different scenarios. We also introduced applications based on large language models such as AITC and Operation Butlerhelping our dealer customer reduce overall cost and increase efficiency.
In 2023, the average revenue for data products per dealer store and the average number of data products adopted by each dealer store both grew by over 20% compared to the prior year, as the number of dealer customers for data products continued to ramp up, driving a 38% year-over-year increase in dealer data revenue for the year. We expect our digital products to maintain their strong growth momentum, contributing to a more diversified revenue mix for Autohome. [Foreign Language] In terms of our used car business, we offer a wide range of products to help used car dealers manage their daily business operations more efficiently. For example, our one-stop platform for vehicle condition price inquiries provides a convenient way for dealers to access relevant information and has received positive feedback.
We’ve also launched a membership product specifically designed for used cars, providing dealers with a comprehensive information management platform. On the other hand, we have successfully expanded TTP’s business through new retail stores. In 2023, TTP delivered a year-over-year revenue growth of over 10%. [Foreign Language] In conclusion, we have steadily grown revenue while achieving a more optimal revenue mix and driving a significant increase in user traffic. Our new retail business is growing rapidly and our overall business is making steady progress. Looking ahead, we will continue to invest in new models, technologies and products and proactively explore opportunities that further – for further business resource and user synergies with Ping An Group.
Through this efforts, we aim to create new growth momentum and position ourselves for continued success in the future. [Foreign Language] Let me walk you through the key financials for the fourth quarter and full year 2023. Please know that as with prior course, I will reference RMB only in my discussion today unless otherwise stated. [Foreign Language] Net revenues for the fourth quarter were RMB1.91 billion, breaking down by segment, media services revenues were RMB500 million, leads generation services revenue were RMB841 million, and online marketplace and others revenues were RMB569 million, up 14.8% year-over-year. [Foreign Language] Moving on to costs. Cost of revenues in the fourth quarter was RMB368 million compared to RMB371 million in Q4 2022.
Gross margin in the fourth quarter was 80.8% compared to 80.4% in Q4 2022. [Foreign Language] Turning to operating expenses. Sales and marketing expenses in the fourth quarter was RMB730 million compared to RMB633 million in Q4 2022. Product and development expenses were RMB356 million compared to RMB313 million in Q4 2022. Finally, general and administrative expenses were RMB157 million compared to RMB103 million in Q4 2022. [Foreign Language] Overall, we delivered operating profit of RMB367 million in the fourth quarter compared to RMB513 million in the conspiring period of 2022. Adjusted net income attributable to Autohome was RMB503 million in the fourth quarter compared to RMB669 million in the corresponding period of 2022. [Foreign Language] Non-GAAP basic and diluted earnings per share in the fourth quarter were both RMB1.04 compared to RMB1.36 and RMB1.35 respectively in the corresponding period of 2022.
Non-GAAP basic and diluted earnings per ADS in the fourth quarter were RMB4.15 and RMB4.14 respectively compared to RMB5.42 and RMB5.41 respectively in a corresponding period of 2022. [Foreign Language] Let me now turn to a short summary of our year – 2023 full year result. Total revenues were RMB7.18 billion, an increase of 3.5% year-over-year. Of that, media services revenue were RMB1.87 billion, leads generation services revenue were RMB3.11 billion and the online marketplace and others business revenue increased by 14.6% year-over-year to RMB2.2 billion. In addition, we delivered an adjusted net income attributable to Autohome of RMB2.16 billion with adjusted net margin of 30.1%. [Foreign Language] As of December 31, 2023, our balance sheet remains very strong with cash, cash equivalents and short-term investments of RMB23.55 billion.
We generated net operating cash flow of RMB2.45 billion in 2023. [Foreign Language] In November 2021, our board of directors authorized a share repurchase program under which we were permitted to repurchase up to US$200 million of Autohome's ADS for a period not exceed 12 months thereafter. In November 2022, our board of directors authorized an extension of this share repurchase program for another twelve months. As of December 31, 2023, we have completed this share repurchase program with repurchase approximately 6.73 million ADS for a total cost of approximately US$200 million. [Foreign Language] With that, now we are ready to take your questions. Operator, please open the line for Q&A session.
Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question is comes from the line of Thomas Chong from Jefferies. Please go ahead.
See also 12 Best Asian Dating Sites Without Payment and 15 Best Gay Dating Sites and Apps of 2024.
To continue reading the Q&A session, please click here.
