Q4 2023 Cheche Group Inc Earnings Call
Participants
Miranda Davidson; IR; Cheche Group Inc
Lei Zhang; CEO; Cheche Group Inc
Wenting Ji; CFO; Cheche Group Ltd
Mark Long; Analyst; Prime Impact Capital
Presentation
Operator
Good day and welcome to the Cheche Group fourth quarter and 2023 earnings conference call. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Miranda Davidson, Investor Relations. Ms. Davidson floor is yours.
Miranda Davidson
Thank you, operator. Hello, everyone, and thank you for joining us to review Cheche's 2023 fourth quarter and full-year results. This morning, Cheche posted both the earnings release and related investor presentation to its website at ir.chechegroup.com. With me on the call today our Lei Zhang, Cheche's, Founder and Chief Executive Officer; Wenting Ji, Cheche's Chief Financial Officer; and Ting Lin, Cheche's Chief Strategy Officer. After prepared remarks are concluded, we will open the call for questions.
Before we begin some statements in this teleconference are forward-looking within the meaning of federal securities laws. Although we believe these statements are reasonable, we can give no assurance that they will prove to be accurate because they are prospective in nature. Actual results could differ materially from those we discuss today.
We encourage you to review the most recent Form F-4 and subsequent filings for risk factors that could materially impact our results. As I mentioned, the earnings release and investor deck are available at ir.chechegroup.com, and we encourage you to review the reconciliations of certain non-GAAP measures contained within.
With that, I'll turn it over to Lei Zhang, Chief Executive Officer. Lei, please go ahead.
Lei Zhang
Thank you, Miranda. Good morning, everyone. It's a great pleasure to host our first earnings call. We are glad we have [done that]. Cheche group is China's largest auto insurance technology platform by digital auto insurance transaction premiums and [Rita] an active driver in the digital transformation through our cutting edge, embedded and policy and unique data offerings, Cheche Rita is well positioned to capture significant opportunities resulting from accelerating digitalization of the auto insurance market in China.
As of December 31, 2023, Cheche had facilitated a wider range of auto insurance transactions and then provide quotes for over 44 million vehicles, placing over [USD6 billion] increase in premium and collaborating with over 100 insurance carriers between 2021 to 2023. We believe that depth and breadth of our network provide a strong competitive barrier for auto intermediaries to provide integrated platform to generate additional revenue stream and deepen their customer relationships.
But it's a bad access to utilize our flagship digital insurance transaction products through easy issue, personalized for insurance agents and other services professionals. We also have such solution for insurance carriers, intermediaries and regulatory bodies include the digital search and intelligent Westell the SaaS group of products that have insurance intermediaries and have operating efficiency, meeting evolving regulatory requirements.
As an EV insurance platform. [SaaS] platform following the EV jointly developed by Twitter and the Shanghai insurance exchange. [SIE] allows us the SIE to analyse and manage risks for electrical vehicle. These products are designed to be delivered and we have mobile web, WeChat, and third-party application. Our platforms open at [Tatco] also enables interoperability with many applications systems and are offering adopted by the ecosystem participants.
EV Insurance Solution 2.0 is the integrated platform connected to more than 10 of the leading insurance companies and currently serving more than 10 of top energy companies. The platform then started with the innovative products and the digital operation, providing data-driven insights to our sales network of over 400 people located in more than 110 branches across 25 provinces nationwide. Our scalable self-reinforcing cloud-based model reaches consumers constantly efficiently and the accumulated valuable data insights that in turn contributed to the precision of our products.
China's auto market is undergoing a press event, a period of change driven by [three major 41]. When the rapid shift from internal combustion to new energy vehicles. Second, the market adoption of smart vehicle technologies, including an advanced autonomous driving. The serve and the rise of China as a major auto exporter given the consolidation also domestic market.
While Apple recently terminated its [car] development program, China Xiaomi launched the first of these workers today as an extension of our immersive consumer experience. In many ways, China is leapfrogging the US and Europe with a next generation of NEV, including a far wider selection of workers. A more rapid innovation cycle, a low-cost structure and the more intensive investment into core technologies.
NEV projected to cause serious order of 50% of new vehicle sales in China as early as this coming May. And as of 2024, [sales volume] of NEV is expected to exceed RMB12 million with almost 100 new models coming to market this year. At the same time, there is a massive consolidation underway that will favor the most innovative cost competitive and a well-funded player. This [transaction] also have several implications for how auto insurance is designed and delivered. Increasingly insurance is issued and a renewed through some other vehicle touch screen on app, resulting in a [DKR] consumer appearance and generating additional revenues for the automaker. [Cheche] is currently serving as a technology partner for EV manufacturers such as Samsung, VITA, and other higher profile brands.
Second, the density of sensors in the latest generation of NEV means that issuers and automakers can shift towards automating the claims management experience. And is significantly reducing the incidence of fraud. Cheche is providing the technology to make this happen to improve both the consumer claims experience and the insured risk management.
Leverages sensor and AI technology in [NEV] it is now possible to record data before essence and automatically monitor what happens thereafter. This data can be waived and transmitted to the insurance company, allowing them to quickly obtain asset and related information. [Build up] the claim settlement process and reduce human errors and delays. By analyse, we [expand] data with insurance companies can allow phone though accelerate the timing and extent of vehicle damage and repair costs. That's awarding unnecessary disputes.
Third, at the level three and level four automation become reality, liability will increasingly rely on data stream to determine whether [accident] was due to the automakers. The operator is some hybrid of the two. Totally collaborating closely with the relevant regulatory authorities and industry stakeholders to address these questions. At EV intelligence and connectivity increase and the autonomous driving technology to become a reality future EV policy will be more accurately priced and our liability will be divided into autonomous driving liability insurance and the traditional worker insurance.
Auto manufacturers will begin to undertake a portion of a liability, a lodging, a Paradox auto policy for the consumer and the reducing the total cost of our EV ownership. Electric vehicles, so that's what's real-time and the precise data worker usage and the driver behaviour, which would be revolutionized the actuarial models, traditional auto insurance that currently rely on [state] historical data coupled with application of AI in the insurance industry, particularly in the actuarial science in insurance pricing, we are shifting from a mode simply this pricing model to a diversified and the free side. This will result in more diverse product performance such as mild AD based insurance and even the potential for customized pricing for each vehicle.
Total score for this year, aligned with the growth strategies, we have been falling under the critical dynamics that are impacting the automotive industry in China. I think the transition rapidly to a green intelligent and a global facing future. We will maintain our position as the most comprehensive ecosystem for auto and related insurance products in China.
As illustrated recently by continued expansion of our relationship with Sinopec, we will align ourselves with the leading NEV brands in China as a key technology partner, that helps insurance and claims management directly into the worker (inaudible) appearance. We will continue to leverage the rich data streams from intelligence workers and AI to enhance efficiency, risk management and the bottom line of the insurers.
We'll be working with industry stakeholders and Directors to increase compliance and transparency in the industry. While it's [70] required then for the rapidly approaching what does autonomous driving, we will also thoughtfully pursue opportunities to expand overseas at our manufacturing partner can transact tension in marketing, including Southeast Asia, the Middle Eastern and Europe. In summary, we expect that 2024 will be an exciting year for our industry and for Twitter.
Thank you for your interest in our story.
I will now turn the call over to our CFO, Wenting Ji. Thank you.
Wenting Ji
Thank you, Lei. And I'd like to begin by touching on our fourth quarter and full-year operational and financial highlights and providing our expectations for 2024 before taking questions. Cheche continues to scale the business with a technology driven capital efficient approach. As a result, total written premiums placed for the quarter increased 24.7% to RMB6.4 billion or USD894 million. Well total written premiums placed for the full year increased 36.2% year-over-year to earning RMB22.6 billion or [USD8.2 billion].
The total number of policies placed grew 26.3% in the fourth quarter to 4.8 million, where for full year the number increased to 28.5% year-over-year to 15.8 million. For the quarter were 155,000 policies and the RMB511 million of the corresponding premiums were embedded in new NEV deliveries growing 391.7% and 322.7% respectively year-over-year.
Policies embedded in the new annual deliveries and the corresponding premiums for full year reached 416,000, RMB1.45 billion or USD204.2 million, representing growth of 536.7% and the 525.28% respectively compared to the prior year. Cheche chart railcars, but strong positive growth has been largely organic and the highly efficient from a marketing standpoint with a substantial amount of business generated through word-of-mouth referrals and the local industry relationships. This is illustrated by the addition of our the 50 and the 700 new referral partners in the quarter contributing to over 1.1 million total referral partners at the year's end.
In a similar vein insurance intermediaries totaled over 4,500 and insurance company contracts were over 1,900 at the year end. There are children, these are [children] in part by our growing partnership with NEV manufacturers and the retail networks, such as the recently announced expanded partnership with Sinopec 5,000 gas stations nationwide.
[Nevertheless] goes to financial update parts. In terms of top line results. We generated RMB867.8 million or USD122.2 million in the fourth quarter, up 12.1% year-over-year. The increase was mainly attributable to growth in insurance transactions conducted through our platform by referral partners and third-party platform timers.
For the year, net revenues saw even stronger growth increasing 23.2% to be RMB3.3 billion or USD465 million. Cost of revenues in the fourth quarter was RMB824.2 million or USD116.1 million, up 13.4% in the quarter and the 24.6% for the year to really be RMB3.16 billion for or USD445.2 million. The total operating expenses growth increasing 50% to -- 15.1% in the fourth quarter and 19.3% for the year has primarily been driven by the increase of share-based compensation expenses and the lifting related professional service fees.
Excluding live non-GAAP expenses says, our adjusted total operating expenses increased 8.1% in the quarter, mainly due to the increase of postal listing professional service fees. For the year our adjusted total operating expenses decreased by 16.6% from the prior year, well as a percentage of net revenues, adjusted total operating expenses decreased from 8.5% for the prior year to 5.7%, resulting from the growth of our net revenues and the improvement of our operational efficiencies.
Our net loss in the quarter was the RMB32 million for USD4.5 million greater than the comparable loss in the fourth quarter of 2022. The adjusted net loss for the quarter was only RMB4.9 million or USD0.7 million compared to a gain of RMB4.2 million in the prior year's quarter. The change was mainly driven by an increase of RMB5.6 million in total listing growth professional service fees and a decrease of RMB3.7 million in gross profit due to the decrease of SaaS revenues.
Full year net loss grew to be RMB159.6 million or USD22.5 million, from the RMB91 million in the prior year, well, excluding non-GAAP expenses, the adjusted net loss improved 35.7% from RMB51.6 million, to RMB32.2 million or USD4.7 million.
Turning to our balance sheet, our cash position remains strong with RMB264.9 million (sic - see press release, RMB243.4 million) in cash, cash equivalents and short-term investments provides us with healthy financial flexibility. As we look ahead, Cheche expects its net revenues for the year of 2024 to range from RMB3.5 billion to RMB3.7 billion, representing an increase of 6.1% to 12.1% compared to a full year of 2023.
Our total written premiums placed are expected to range from RMB24.5 billion to RMB26.5 billion, representing an increase of 8.4% to 17.3% compared to the full year 2023.
With that, we are very happy to address your question. Thank you.
Question and Answer Session
Operator
(Operator Instructions)
[Yu Yu Chong, CICC].
[Thanks], management, Yu-Cheng from the CICC. Here I have one question. So could you give us some more color on your future strategy as your new energy vehicle insurance business? Thanks.
Lei Zhang
(spoken in foreign language)
Wenting Ji
Okay. As the largest NEV auto insurance provider in China, we have served that all top 10 major NEV makers in China such as expand the auto avatar and vital auto. And this year, the NEV insurance will still be the focus of our growth strategy. And this year, the NEV sales have accounted for over 50% of the total new cars in China. So we believe that we will continue to work with our NEV partners and the benefit from the explosive expansions of the NEV's.
Lei Zhang
(spoken in foreign language)
Wenting Ji
And on the other hand, NEVs are more about the autonomous driving and the more intelligence. So we will, we can expect that we will work with more NEV makers and to provide a more services on the precise insurance pricing. And we expect that the new the smart pricing, insurance pricing cannot go without the big data and the artificial intelligence technology. So we will continue to invest in this aspect, to meet the needs of the smart auto insurance and the needs of our partners.
Lei Zhang
Thank you very much.
Operator
Mark Long, Prime Impact Capital.
Mark Long
Hi, Lei and [Sandra]. [Ting] congratulations on a very strong 2023 and positioning the company for a very strong 2024.
My question way was about your plans for continuing to develop AI base technology for the auto insurance market in especially the EV space. Could you elaborate on your plans for deploying AI and machine learning as you continue to and your product set?
Lei Zhang
Thank you, Mark. (spoken in foreign language)
Wenting Ji
The smart insurance depends on the data that we gain from the autonomous driving and at present on China and the smart NEVs as a connected into the IoT system and can provide a rich driving data, driving behaviors the mileage and the scope of its behavior and there's a battery information.
Lei Zhang
(spoken in foreign language)
Wenting Ji
And there are two aspects as to how we will deploys the artificial intelligence. Our hand, we will assist the insurance carriers to realize a diversified the pricing for the IoT vehicles and to support their anti-fraud efforts. And on the other hand, when the accident happened our smart claims, system will update the information to the claims center of the insurance carriers. So and the smart insurance and the precise pricing cannot be -- cannot go without that rich data.
Lei Zhang
(spoken in foreign language)
Wenting Ji
So I believe that the auto insurance, we are on target from the current financial product into a more IoT-based and online services with a precise insurance pricing and other financial services with the growth of more smart vehicles.
Mark Long
Thank you.
Operator
(Operator Instructions)
I would like to turn the conference back over to Lei for any closing remarks.
Lei Zhang
Thank you, everyone, for joining the call. If you have any follow up questions, please contact our Investor Relations team. Have a good day. Thank you. [Everyone], thank you.
Operator
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
