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Edited Transcript of TC.OQ earnings conference call or presentation 20-Aug-19 12:00pm GMT

Q2 2019 TuanChe Ltd Earnings Call

Aug 21, 2019 (Thomson StreetEvents) -- Edited Transcript of TuanChe Ltd earnings conference call or presentation Tuesday, August 20, 2019 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Cynthia Tan

TuanChe Limited - IR Director

* Wei Wen

TuanChe Limited - Chairman & CEO

* Zhihai Mao

TuanChe Limited - CFO

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Conference Call Participants

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* Allen Robert Klee

Maxim Group LLC, Research Division - Senior VP & Senior TMT Analyst

* Laura Liu

Stone Street Group LLC - Co-Founder

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Presentation

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Operator [1]

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Good morning, and good evening, everyone. Thank you for standing by, and welcome to TuanChe Limited's Second Quarter 2019 Earnings Call. (Operator Instructions)

Now I will turn the call over to your speaker host today, Ms. Cynthia Tan, IR Director of the company. Please go ahead, ma'am.

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Cynthia Tan, TuanChe Limited - IR Director [2]

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Hello, everyone, and welcome to TuanChe's Second Quarter 2019 Earnings Conference Call. The company's earnings results were released earlier today and are available on the company's IR website as well as on newswire services.

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 involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in our earnings release and our registration statement filed with the SEC. TuanChe does not assume any obligation to update any forward-looking statements, except as required by law.

Today, you will hear from Mr. Wei Wen, the company's Chief Executive Officer, who will comment on our operating results. He will be followed by Mr. Troy Mao, the company's Chief Financial Officer, who will provide additional details on TuanChe's performance, review the company's financial results and discuss the financial outlook. Following management's prepared remarks, we'll open up the call for questions.

With that said, I would now like to turn the call over to our CEO, Mr. Wen. Please go ahead, sir.

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Wei Wen, TuanChe Limited - Chairman & CEO [3]

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Hello, and thank you, everyone, for joining us on our second quarter earnings call today. During the quarter, car sales in China continued to plunge due to the uncertainty in the macroeconomic environment and unexpected regulatory changes. According to the China Association of Automotive Manufacturers, passenger vehicle sales further dropped by more than 14% in the first half of 2019. Despite these adverse market conditions, we continued to execute our prudent expansion strategies into lower tier city -- into lower tier cities and sustain our growth momentum.

Importantly, our net revenues in the second quarter of 2019 increased by 11.9% to RMB 203.5 million. Such growth was driven by the strong performance of our off-line marketing services, which generated RMB 196.4 million in revenues during the quarter, and increased by 8% year-over-year. In addition, the continued ramp-up of new business initiatives, including virtual dealership and online marketing services, also contributed to our growth in the quarter.

During the second quarter of 2019, we achieved success in 3 key areas: One, expanding our core auto show business into lower tier city markets; two, accelerating the development of customized special events; and three, progressing in our virtual dealership and online marketing services. Our success in these areas and strong brand equity enabled us to maintain a healthy growth trajectory throughout the market downturn in the quarter.

First, for our car auto show business we've continued to expand into lower-tier cities, while maintaining our industry-leading market share in first and second tier cities. Despite China's economic slowdown continuing in the first half of 2019, lower-tier cities have experienced a significant consumption upgrade. In fact, while big city residents have more disposable income, it is their peers in lower-tier cities and the county districts who are more willing to spend a premium on aspirational purchases. In view of this market trend, we proactively worked to continue establishing our first mover advantage in these high-growth potential markets during the quarter.

As a result, we successfully organized 344 auto shows across 186 cities during the second quarter of 2019 compared to 219 auto shows in 116 cities in the prior year period. These consistent improvements to auto show geographic coverage once again demonstrated the effectiveness of our prudent expansion strategy, pervasiveness of our brand recognition and force of our market leadership.

Secondly, we continued to accelerate the development of customized special promotion events during the quarter. Due to unexpected changes in government automobile regulation and the challenging macroeconomic environment, both OEMs and 4S dealers are currently under significant pressure to reduce their inventory. By accelerating the development of our customized special promotional events, we helped customers to optimize both their consumer experience and sales conversion rate. As a result, service fees generated from our special promotional events exceeded our previous expectations in the quarter, contributing RMB 5.8 million to our total revenues.

Thirdly, our recently announced acquisition of Longye International has made a meaningful progress. Longye is a leading system developer that creates and implements social CRM cloud systems for China's automotive industry. Longye's flagship SaaS product, Cheshangtong provides auto dealers with social CRM services by facilitating the effective flow of information between auto dealers and customers. This acquisition will enable us to help auto dealers digitize their operations, produce actionable analytics, enhance their sales capabilities, and optimize their social media marketing campaigns.

Longye has also recently developed an AI-powered in-store traffic solution that maximized auto dealer's in-store monetization capabilities. This system uses high-definition cameras, equipped with AI-based facial recognition and biometric technology to produce precise, multifaceted user profiles. Based on its profile analysis, the system matches customers to the most suitable sales representatives in the dealership, while storing the profiles for future follow-up and inspection. This system improvements -- improves the efficiency and the results of auto dealers in-store traffic management process, while reducing labor costs and mitigating the risks of losing valuable sales leads. We are confident that the [unique] value provided to auto dealers through these social CRM services will enhance our dealer stickiness.

In summary, our strategy to expand into lower-tier city markets with high-growth potential has shown promising results in the second quarter. As we continue to enhance our service offerings to OEMs and auto dealers, we improve our ability to capture additional market share in turn.

Despite the current adverse market conditions, we are confident that this work combined with our nationwide service coverage, diversified revenue streams and strong brand equity will fortify our market-leading position going forward.

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Cynthia Tan, TuanChe Limited - IR Director [4]

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Now let's turn the call to our CFO, Mr. Troy Mao.

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Zhihai Mao, TuanChe Limited - CFO [5]

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Thank you, Wei. Hello, everyone. Before I start, please be reminded that beginning January 1, 2019, we changed our revenue classifications and decided to report our net revenues under the following new segments. First, off-line marketing services - auto shows; second, off-line marketing services - special promotional events; and the third, virtual dealership, online marketing services and others.

Now before I move on to our second quarter financial results, please also note that all numbers stated here are in RMB terms and all percentage comparisons are on a year-over-year basis unless otherwise noted.

Despite the challenging market conditions in the second quarter, our revenues increased by 11.9% to RMB 203.5 million from RMB 181.9 million in the same period last year, primarily driven by the revenue growth from our off-line marketing services, which increased by 8.0% year-over-year to RMB 196.4 million from RMB 181.8 million in the same period last year. It is worth highlighting that off-line marketing services revenues generated from our special promotion events reached RMB 5.8 million in the second quarter compared to RMB 0.8 million in the first quarter of 2019.

Based on the performance of our special promotion events, we have confidence in the business growth prospects and expect that it will continue to contribute to our long-term growth going forward.

Despite new car sales in China continuing to decline in the second quarter, the total gross merchandise volume of new automobiles sold through our off-line events increased by 7.8% to RMB 15.2 billion from RMB 14.1 billion in the same period last year, thanks to our prudent expansion strategies. Meanwhile, the number of automobile sales transactions facilitated during the quarter increased by 12.0% to 110.4 thousand from 98.6 thousand in the same period last year.

In addition to our off-line marketing services business, we also continued to ramp up our new growth initiatives during the second quarter. Revenues from virtual dealerships, online marketing services and others increased to RMB 7.1 million during the second quarter. Our gross profit in the second quarter increased by 9.0% to RMB 144.0 million from RMB 132.2 million, and our gross margin fell slightly to 70.8% from 72.6% in the same period last year.

In the second quarter, selling and marketing expenses increased to RMB 217.5 million from RMB 109.6 million in the same period last year primarily due to an increase in staff compensation expenses as well as our advertising and promotional activities, which not only continued to boost our growth but also further strengthened our brand influence. Selling and marketing expenses for the second quarter included share-based compensation expenses of RMB 71.5 million, compared to RMB 7.1 million in the same period last year.

General and administrative expenses increased to RMB 28.1 million from $22.9 million in the same period last year, which was due to a headcount increase as a result of our business expansion during the second quarter. To a lesser extent, we also incurred higher professional fees and other ongoing expenses as a public company in the second quarter of 2019. General and administrative expenses included share-based compensation expenses of RMB 7.5 million and bad debt allowance of RMB 6.8 million in the second quarter.

Research and development expenses increased to RMB 9.9 million from RMB 3.9 million in the same period last year, as a result of our efforts to improve and innovate our product and service offerings. Consequently, our loss from continuing operations was RMB 111.4 million in the second quarter compared with RMB 4.2 million in the same period last year. Excluding the effect of share-based compensation expenses, fair value loss of warrant and impairment of investment, adjusted net loss attributable to the company's shareholders was RMB 29.3 million in the second quarter compared to an income of RMB 16.1 million in the same period last year.

Adjusted diluted loss per share was RMB 0.10 in the second quarter compared to a gain of RMB 0.17 in the same period last year. Adjusted EBITDA was a loss of RMB 30.4 million in the second quarter compared to an adjusted EBITDA of RMB 17.7 million in the same period last year.

Now turning to our balance sheet. At the end of June 2019, we had RMB 364.3 million in cash and cash equivalents. Let me also give a brief overview of our half year results. For the first half of 2019, our net revenues increased by 21.2% year-over-year to RMB 326.4 million, driven by the 17.4% year-over-year revenue growth in off-line marketing services. Gross profit for the first half of 2019 increased by 19.3% year-over-year to RMB 232.9 million and gross margin was 71.4% compared to 72.5% in the first half of 2018.

Adjusted net loss attributable to company's shareholders for the first half of 2019 was RMB 44.8 million compared to an income of RMB 3.3 million in the first half of 2018. Adjusted EBITDA for the first half of 2019 was a loss of RMB 48.2 million compared to an adjusted EBITDA of RMB 6.5 million in the first half of 2018.

Before I discuss our outlook for the third quarter, I would like to provide some color on the recent regulatory changes and how they have impacted the auto industry in China. Originally planned for July 2020, China unexpectedly released the new national 6 standards, some of the world's strictest standards for auto emissions, on July 1, 2019. These auto emission standards have already been introduced in 15 seriously polluted cities and provinces, and will soon be introduced to other cities as well. Due to these regulations, cars that fail to meet new emission standards have been barred from production, sale, and registration in targeted areas. During the second quarter, the majority of individuals planning to purchase cars delayed their vehicle purchases to wait until the new emission standards took effect. As a result, OEMs and auto dealers, desperate to reduce their inventories of cars unable to meet new standards, rushed to introduce unprecedented vehicle discounts, and, in doing so, temporarily boosted their car sales in June.

However, as the Chinese carmakers have begun the process of developing engines and auto parts that comply with the new standards, the supply of new cars has been slow to catch up, further creating uncertainties for car sales in the remainder of 2019. Mindful of these marketplace trends in the third quarter of 2019, we expect our net revenues to be between approximately RMB 160 million and RMB 170 million, representing an approximate year-over-year growth of 3.0% to 9.5%. Please note that this forecast reflects our current and preliminary views on the market and operational conditions, which are subject to change.

This concludes our prepared remarks for today. Operator, we are now ready to take questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We have our first question coming from the line of Allen Klee of Maxim Group.

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Allen Robert Klee, Maxim Group LLC, Research Division - Senior VP & Senior TMT Analyst [2]

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I'd like to start with what you just finished talking about the regulatory changes. Could you help us maybe how you think the path will be of getting through this uncertainty kind of your best guess of how long it might last and then get back to a little bit more clear situation and higher sales, hopefully?

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Cynthia Tan, TuanChe Limited - IR Director [3]

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Let me translate to Mr. Wei Wen. (foreign language)

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Wei Wen, TuanChe Limited - Chairman & CEO [4]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [5]

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[Interpreted] About regarding your question on how long we'll get to a normal market standard, we expect that impact from national 5 standard transition to national 6 standard will last for about 1 quarter, expect -- the impact will be mainly on the third quarter of 2019.

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Allen Robert Klee, Maxim Group LLC, Research Division - Senior VP & Senior TMT Analyst [6]

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Okay. But then just a follow-up. Does it have an impact on cars that -- what about -- there's a bunch of cars that will not meet the standard. So does that mean that the overall demand will just naturally drop or your understanding is that they'll get reconfigured to meet the standard?

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Cynthia Tan, TuanChe Limited - IR Director [7]

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Let me translate. (foreign language)

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Wei Wen, TuanChe Limited - Chairman & CEO [8]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [9]

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[Interpreted] The national standard of -- the national #6 standard is not implemented in all areas of China. There is still we expect about 70% of the highly polluted cities and areas already implemented the standard, but still there are remaining areas, where the #5 standard vehicles can be sold and registered. So we expect the car -- the automakers will move the inventories to other areas to sell-through.

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Allen Robert Klee, Maxim Group LLC, Research Division - Senior VP & Senior TMT Analyst [10]

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Okay. That's helpful. And then just if I look at the number of auto shows you put on, that was -- it was quite impressive the growth rate year-over-year but it looks like for each auto show, I'm guessing you're making less money. Is that a function of that you're moving into smaller cities or that there's less booths that are being taken up? Or how should we think about the growth rate in auto shows and then kind of the revenue that you'll make per auto shows?

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Cynthia Tan, TuanChe Limited - IR Director [11]

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Let me translate first. (foreign language)

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Wei Wen, TuanChe Limited - Chairman & CEO [12]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [13]

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[Interpreted] The 2 factors you mentioned are actually part of the reason. But the most prioritized reason is that our marketing -- our industry customers marketing budgets are greatly reduced due to current market conditions.

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Wei Wen, TuanChe Limited - Chairman & CEO [14]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [15]

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[Interpreted] The secondary reason for the unparalleled growth in our revenue per our auto show growth is that we actually turn -- as you mentioned, actually turned into smaller cities where there will be less brands and less booths and thus lower revenue per auto show. Does that answer your question?

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Allen Robert Klee, Maxim Group LLC, Research Division - Senior VP & Senior TMT Analyst [16]

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Yes, thank you. And then for virtual dealerships, could you perhaps -- is there any metrics of the number of virtual dealers that you've done and how that compares? And how you think about how that can potentially grow going forward?

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Cynthia Tan, TuanChe Limited - IR Director [17]

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Let me translate first. (foreign language)

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Wei Wen, TuanChe Limited - Chairman & CEO [18]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [19]

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[Interpreted] Let me translate, we have launched our auto dealership business in various cities across China, but actually we are more focused on the iteration and exploration of the product from a business model for now. So -- and we successfully launched a whole new groundbreaking flagship store of our virtual dealership at the end of the second quarter.

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Wei Wen, TuanChe Limited - Chairman & CEO [20]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [21]

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[Interpreted] This flagship store covers an area of over 1,000 square meters with independent show places for 10 different auto brands, which will break the traditional limits of single brand 4S dealership store.

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Wei Wen, TuanChe Limited - Chairman & CEO [22]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [23]

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[Interpreted] It also fully digitalized equipping with our AI-based in-store traffic management system together with our social CRM system, which is a part of our synergy from our acquisition of Longye Corporation in progress. This will allow us to efficiently manage the store and sales -- and improve the sales conversion rate.

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Wei Wen, TuanChe Limited - Chairman & CEO [24]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [25]

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[Interpreted] We defined this new business model as the new car supermarkets or the new car mall. We are seeing very promising progress for now in our flagship store model and will further expand the model into other suitable locations once ready. Does that answer your question?

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Allen Robert Klee, Maxim Group LLC, Research Division - Senior VP & Senior TMT Analyst [26]

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Yes, thank you so much. And then maybe just following up on what you've mentioned on Longye. Can you fill us in terms of -- is this at the point that, that it -- has it closed and have the shares been issued? And then if they have been, maybe related to that in terms of the USD 20 million buyback you've announced, can you say like how much of that has been utilized?

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Zhihai Mao, TuanChe Limited - CFO [27]

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Sure. Allen, let me answer your question. Even though there is still uncertainties in terms of regulatory requirement, we expect to close the acquisition of Longye by the end of Q3. So right now, we have not consolidated Longye yet. Regarding the $20 million buyback program, since the Board approvals, we have initiated the buyback activities from the open market. You will definitely expect to see the results from our Q3 financials. Right now, we cannot disclose more than that.

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Allen Robert Klee, Maxim Group LLC, Research Division - Senior VP & Senior TMT Analyst [28]

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Okay, thank you. And then maybe my last one and then I'll get back in the queue. So last quarter you talked about a partnership you were going to be entering in with Easyhome, which I think had around 200 potential locations. Could you maybe provide an update of where that stands?

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Cynthia Tan, TuanChe Limited - IR Director [29]

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Let me translate. (foreign language)

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Wei Wen, TuanChe Limited - Chairman & CEO [30]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [31]

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[Interpreted] Actually our cooperation with Easyhome is progressing very smoothly for now.

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Wei Wen, TuanChe Limited - Chairman & CEO [32]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [33]

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[Interpreted] We already have 42 auto shows in 40 cities [on Easyhome's venues] (corrected by company after the call) since our cooperation announced in late April.

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Wei Wen, TuanChe Limited - Chairman & CEO [34]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [35]

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[Interpreted] We'll further bring our auto show to Easyhome's over 300 home furnishing malls in 200 cities across China and improve the consumer experience and cost efficiency of our future auto shows and virtual dealership. Does that answer your question?

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Allen Robert Klee, Maxim Group LLC, Research Division - Senior VP & Senior TMT Analyst [36]

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Yes, thank you so much.

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Operator [37]

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Next question is from the line of Laura Liu of Stone Street Group.

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Laura Liu, Stone Street Group LLC - Co-Founder [38]

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This is Laura. Can you please tell us a bit more like the color of the -- the background and also the role of the new COO, Mr. Yuan, like his expertise? And also, how is he going to help the company to grow in the long run?

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Cynthia Tan, TuanChe Limited - IR Director [39]

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Thank you Laura. Let me translate the question first. (foreign language)

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Wei Wen, TuanChe Limited - Chairman & CEO [40]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [41]

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[Interpreted] First of all, we warmly welcome Mr. Hui Yuan to join our TuanChe family.

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Wei Wen, TuanChe Limited - Chairman & CEO [42]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [43]

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[Interpreted] Mr. Yuan has over 18 years of experience in China automotive industry. He expertise in the management of product development, operations, sales and marketing.

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Wei Wen, TuanChe Limited - Chairman & CEO [44]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [45]

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[Interpreted] Mr. Yuan was working as President and Chairman of product and technology committee of Bitauto Holdings, and after leaving Bitauto as founder and CEO of HuiMaiChe, he co-founded XiongmaoCar.

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Wei Wen, TuanChe Limited - Chairman & CEO [46]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [47]

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[Interpreted] Before launching his career in the automotive industry, Mr. Yuan also held product R&D position in several Chinese Internet companies, including Dangdang.com

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Wei Wen, TuanChe Limited - Chairman & CEO [48]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [49]

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[Interpreted] As our new COO of the company, Mr. Yuan will oversee the development of our omni-channel marketplace as well as the ongoing optimization of user experience. In addition, he will lead the company's efforts in product research and development, online marketing, Big Data operation and new sales and marketing initiatives. Does that answer your question, Laura?

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Laura Liu, Stone Street Group LLC - Co-Founder [50]

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Yes. And also I am also interested in the synergy of the merger with Longye, not sure if you can just tell us more about the synergy of this acquisition?

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Cynthia Tan, TuanChe Limited - IR Director [51]

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Let me translate first. (foreign language)

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Wei Wen, TuanChe Limited - Chairman & CEO [52]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [53]

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[Interpreted] As we mentioned in previous remarks, the acquisition is still ongoing.

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Wei Wen, TuanChe Limited - Chairman & CEO [54]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [55]

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[Interpreted] Longye is a leading SaaS provider in auto industry. We believe its rich product lines not only efficiently complement and enrich the existing business line of TuanChe but also provide great strategic value and synergy for the future development.

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Wei Wen, TuanChe Limited - Chairman & CEO [56]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [57]

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[Interpreted] First of all, Longye's flagship social CRM product allowed the sales personnel to directly interact with highly-targeted consumers. This will provide a one-stop one-on-one service from pre-sales consultation to post-sales maintenance, and providing the right interaction and reducing unnecessary levels in the sales funnel, the social CRM system not only greatly improves the consumer's conversion rate but also provide an efficient tool in sales and staff management.

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Wei Wen, TuanChe Limited - Chairman & CEO [58]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [59]

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[Interpreted] In addition, as we mentioned in previous remarks, Longye also recently developed an AI digital store solution that maximize auto dealers in-store monetization capabilities. This system is using high-definition cameras equipped with AI-based facial recognition to produce precise multifaceted user profiles to facilitate sales personnel to enhance consumer conversion rate and management efficiency.

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Wei Wen, TuanChe Limited - Chairman & CEO [60]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [61]

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[Interpreted] We are confident that this product offerings will enable us to help our industry customer to digitize their operation, utilize the Big Data analytics, optimize their social media and marketing campaigns, and improve their sales capabilities, and eventually broaden our industry customer base and enhance use of techniques.

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Wei Wen, TuanChe Limited - Chairman & CEO [62]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [63]

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[Interpreted] On the other hand of the synergy, we'll also implement the social CRM and AI system for the operational management for our own virtual dealership flagship stores and achieve efficient remote control and management. Does that answer your question, Laura?

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Laura Liu, Stone Street Group LLC - Co-Founder [64]

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Yes. That's great.

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Operator [65]

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We have a question from Allen Klee of Maxim Group.

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Allen Robert Klee, Maxim Group LLC, Research Division - Senior VP & Senior TMT Analyst [66]

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Yes. I had 2 follow-ups. The first was, your sales and marketing expense in the second quarter of '19 increased to RMB 217.5 million. But tell me if it's correct that this had an unusual amount of stock-based comp? And so if I took a more normalized amount of stock-based comp, that would be more of a reasonable run rate going forward?

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Zhihai Mao, TuanChe Limited - CFO [67]

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Hi, Allen. This is Troy. Let me take your question. As you noted, there is a significant increase in Q2 in terms of share-based compensation expense for sales and marketing personnels. Even though we cannot make guarantees, we would treat as a one-time event. So we don't expect that a similar pattern will be maintained going forward.

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Allen Robert Klee, Maxim Group LLC, Research Division - Senior VP & Senior TMT Analyst [68]

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That's great, thank you so much. And then my last question, this is really not a fair question, I apologize. But I'm going to do it anyway. If you did not see the regulatory change impact on the results during this quarter, even given the tough macroenvironment you're in, do you think that you would have hit your guidance for 2Q '19?

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Cynthia Tan, TuanChe Limited - IR Director [69]

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Let me translate the question first. (foreign language)

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Wei Wen, TuanChe Limited - Chairman & CEO [70]

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(foreign language)

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Cynthia Tan, TuanChe Limited - IR Director [71]

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[Interpreted] Hi, Allen. Actually, this regarding the national 6 standard implementation impact, the macro economy slowdown is still our major reason for our revenue slowdown. So even excluding that impact, we are still seeing stronger-than-expected market headwinds. So this is why we miss our guidance.

As a follow-up, the national 6 standard implementation, it actually enlarges our pressure in meeting our guidance.

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Operator [72]

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(Operator Instructions) No more question as of this time. I would now like to hand the conference back to the management. Please go ahead.

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Cynthia Tan, TuanChe Limited - IR Director [73]

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Okay. Thank you for joining us on today's call, and looking forward to see you next quarter. Thank you.

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Operator [74]

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Thank you. Ladies and gentlemen, that does conclude the conference for today, and thank you for participating. You may now all disconnect.