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TuanChe Announces Unaudited Third Quarter 2018 Financial Results

Net revenues increased by 106.0% year-over-year

BEIJING, Dec. 18, 2018 (GLOBE NEWSWIRE) -- TuanChe Limited (“TuanChe” or the “Company”) (TC), a leading omni-channel automotive marketplace in China, today announced its unaudited financial results for the third quarter ended September 30, 2018.

Third Quarter 2018 Financial and Operating Highlights (in comparison to the same period of the last fiscal year)

  • Net revenues increased by 106.0% to RMB155.3 million (US$22.6 million) from RMB75.4 million.

  • Auto show net revenues increased by 112.2% to RMB153.6 million (US$22.4 million) from RMB72.4 million.

  • Gross profit increased by 117.0% to RMB109.1 million (US$15.9 million) from RMB50.3 million. Gross margin expanded to 70.2% from 66.7%.

  • The number of auto shows the Company organized increased by 169.7% to 205 across 122 cities from 76 auto shows across 43 cities.

  • The number of automobile sales transactions facilitated through the Company’s auto shows increased by 77.5% to 81,742 from 46,040.

  • The total Gross Merchandise Volume (“GMV”) of new automobiles sold through the Company’s auto shows increased by 51.4% to RMB10.6 billion (US$1.5 billion) from RMB7.0 billion.

  • Sales operations further expanded to 131 cities as of September 30, 2018 from 121 cities as of June 30, 2018.

  • The Company has successfully completed its initial public offering in November 2018 and listed on the Nasdaq Capital Market.

Mr. Wei Wen, Chairman and Chief Executive Officer of TuanChe, commented, “In the third quarter, we continued our expansion as we successfully organized 205 auto shows across 122 cities, despite industry headwinds and the cancellation of some auto shows due to severe weather. These results showcase our ability to execute our growth strategy designed to fully utilize our network of franchised dealerships even in a challenging environment. As for our virtual dealership business launched in June 2018, we began to demonstrate our abilities to penetrate into a broader market by engaging customers from lower-tier cities. We have also cultivated big-data capabilities for our demand-side platform business. We believe that our demand-side platform business will help our industry customers generate sales leads and enhance sales performance, which is particularly valuable to them amid a slow market. Due to the long-term promise of China’s auto market, we look forward to capitalizing on future growth opportunities by focusing on innovative products and delivering superior consumer experiences, thus creating sustainable value for our shareholders.”

Mr. Zhihai Mao, Chief Financial Officer of TuanChe, added, “Our net revenues in the third quarter grew by 106.0% over the same quarter in 2017. Of the total net revenues of RMB155.3 million, we derived RMB1.7 million from our virtual dealership and other services. Entering into the fourth quarter, we have started to implement our cost control measures by refining our auto show organization processes to improve margins in the face of increased market headwinds. As we increase and enrich our service offerings and diversify our revenue sources, we expect that our overall operating and financial results will continue to grow steadily.”

Unaudited Third Quarter 2018 Financial Results

Net Revenues
Net revenues in the third quarter of 2018 increased by 106.0% to RMB155.3 million (US$22.6 million) from RMB75.4 million in the corresponding period of 2017. The increase was mainly due to a 112.2% increase in revenues from auto shows.

  • Auto shows revenues in the third quarter of 2018 increased by 112.2% to RMB153.6 million (US$22.4 million) from RMB72.4 million in the corresponding period of 2017. The increase was primarily due to the increase in the number of cities operated, the number of auto shows organized and the number of booths offered to industry customers, which include franchised dealers, automakers and automotive service providers.

  • Group-purchase facilitation generated no revenue in the third quarter of 2018, because the Company shifted its business focus from group-purchase facilitation to auto shows since the last quarter of 2016, as automobile consumers in China are increasingly willing to explore more brands that fit their budgets and needs. The Company, however, has retained its capability to provide group-purchase facilitation services should demand arise.

  • Virtual dealership and other revenues were RMB1.7 million (US$0.2 million) compared to no revenue generated in the corresponding period of 2017. The Company commenced its virtual dealership business in June 2018.

Gross Profit

Gross profit in the third quarter of 2018 increased by 117.0% to RMB109.1 million (US$15.9 million) from RMB50.3 million in the corresponding period of 2017. Gross margin expanded to 70.2% in the third quarter of 2018 from 66.7% in the corresponding period of 2017, mostly due to the enhanced efficiency of our auto show organization processes and improved bargaining power with third-party service providers.  

Total Operating Expenses and Loss from Continuing Operations

Total operating expenses in the third quarter of 2018 increased to RMB148.0 million (US$21.5 million) from RMB71.7 million in the corresponding period of 2017. The increase was mainly due to increases in selling and marketing expenses and general and administrative expenses as the Company increased the scale of its business.

  • Selling and marketing expenses in the third quarter of 2018 were RMB119.5 million (US$17.4 million) compared to RMB61.0 million in the corresponding period of 2017. This increase was primarily due to the increase in advertising and promotion expenses and sales and marketing staff compensation. Selling and marketing expenses for the third quarter of 2018 included share-based compensation expenses of RMB18.0 million (US$2.6 million) compared to RMB0.2 million in the corresponding period of 2017.

  • General and administrative expenses in the third quarter of 2018 were RMB23.0 million (US$3.3 million) compared to RMB6.4 million in the corresponding period of 2017. This increase was primarily attributable to an increase in the Company’s administrative headcount as a result of business expansion. General and administrative expenses for the third quarter of 2018 included share-based compensation expenses of RMB12.0 million (US$1.7 million) compared to RMB0.4 million in the corresponding period of 2017.

  • Research and development expenses in the third quarter of 2018 were RMB5.5 million (US$0.8 million) compared to RMB4.4 million in the corresponding period of 2017. The increase was mainly driven by the increase in research and development headcount as the Company increased the scale of its business.

Loss from continuing operations was RMB38.9 million (US$5.7 million) in the third quarter of 2018 compared to RMB21.5 million in the corresponding period of 2017.

Net Loss attributable to the Company’s Shareholders and Non-GAAP Measures

Net loss attributable to the Company’s shareholders in the third quarter of 2018 was RMB50.4 million (US$7.3 million) compared to RMB30.1 million in the corresponding period of 2017. Basic and diluted net loss attributable to the Company’s ordinary shareholders per share from continuing operations in the third quarter of 2018 was RMB0.47 (US$0.07) compared to RMB0.30 in the corresponding period of 2017.

Adjusted net loss, defined as net loss excluding the effect of share-based compensation expenses and fair value loss of warrant, narrowed by 65.0% to RMB8.2 million (US$1.2 million) in the third quarter of 2018 from RMB23.4 million in the corresponding period of 2017. Adjusted net loss per share, defined as adjusted net loss divided by the weighted average number of ordinary shares, was RMB0.08 (US$0.01) compared to RMB0.25 in the corresponding period of 2017.

Adjusted EBITDA narrowed by 66.5% to a loss of RMB7.6 million (US$1.1 million) from a loss of RMB 22.5 million in the corresponding period of 2017. Adjusted EBITDA is calculated as net loss before depreciation and amortization of property, equipment and software, interest expenses (net), and does not include share-based compensation expenses and fair value loss of warrant.

For details on the calculation of and reconciliation of the Company’s non-GAAP measures to the nearest GAAP measures, see “Use of Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP and GAAP Results.”

Balance Sheet and Cash Flow

As of September 30, 2018, the Company had cash and cash equivalents and restricted cash of RMB494.6 million (US$72.0 million). Net cash used in operating activities in the third quarter of 2018 was RMB12.0 million (US$1.7 million) compared to RMB15.8 million in the corresponding period of 2017.

Business Outlook

For the fourth quarter of 2018, the Company currently expects net revenues to range approximately from RMB230 million to RMB250 million, representing a year-over-year approximate growth of 101.8% to 119.3%. This forecast reflects the Company's current and preliminary views on the market and operational conditions, which are subject to change.

Conference Call Information

The Company will hold a conference call on Tuesday, December 18, 2018, at 8:00 a.m. Eastern Time or 9:00 p.m. Beijing Time to discuss the financial results. Participants may access the call by dialing the following numbers:

International:    +65-6713-5090
United States:   +1-866-519-4004
China Domestic:    400-620-8038
Hong Kong:    800-906-601
Conference ID:   1255309

The replay will be accessible through December 26, 2018, by dialing the following numbers:

International:    +61-2-8199-0299
United States:   +1-855-452-5696
Conference ID:      1255309

A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://ir.tuanche.com/.

Exchange Rate
This press release contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars, in this press release, were made at a rate of RMB6.8680 to US$1.00, the noon buying rate in effect on September 28, 2018 in the City of New York for cable transfers in Renminbi per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the Renminbi amounts could have been, or could be, converted, realized or settled into U.S. dollars at that rate on September 28, 2018, or at any other rate.

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, the Company’s business plans and development as well as business outlook, which can be identified by terminology such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. Such statements are based upon management’s current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company’s control. Further information regarding these and other risks, uncertainties or factors is included in the Company’s filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law.

Use of Non-GAAP Financial Measures

To supplement our condensed consolidated quarterly financial information which are presented in accordance with U.S. GAAP, we also use adjusted net loss, adjusted net loss per share and adjusted EBITDA as additional non-GAAP financial measures. We present these non-GAAP financial measures because they are used by our management to evaluate our operating performance. We also believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our consolidated results of operations in the same manner as our management and in comparing financial results across accounting periods and to those of our peer companies.

We define adjusted net loss as net loss excluding the impact of fair value loss of warrant and share-based compensation expenses. We define adjusted net loss per share as adjusted net loss divided by the weighted average number of ordinary shares. We define adjusted EBITDA as net loss excluding the impact of depreciation and amortization, interest expenses (net), fair value loss of warrant and share-based compensation expenses. We believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results. These non-GAAP financial measures adjust for the impact of items that we do not consider indicative of the operational performance of our business and should not be considered in isolation or construed as an alternative to net loss or any other measure of performance or as an indicator of our operating performance.

In addition, the non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using these non-GAAP financial measures is that they do not reflect all items of income and expense that affect our operations. Interest income or expenses, depreciation and amortization, fair value loss of warrant and share-based compensation expenses have been and may continue to be incurred in our business and are not reflected in the presentation of these non-GAAP measures. Further, these non-GAAP financial measures may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure. Investors are encouraged to compare the historical non-GAAP financial measures with the most directly comparable GAAP measures.

About TuanChe

Founded in 2010, TuanChe (TC) is a leading omni-channel automotive marketplace in China. TuanChe offers services to connect automotive consumers with various industry players such as automakers, dealers and other automotive service providers. TuanChe has achieved rapid growth in its business by integrating its online platforms with offline sales events. Through its integrated marketing solutions, TuanChe turns individual and isolated automobile purchase transactions into large-scale collective purchase activities by creating an interactive many-to-many environment. TuanChe also provides virtual dealership services by connecting automakers and franchised dealerships with secondary dealers, which ultimately helps automakers penetrate and expand into lower-tier cities. Furthermore, leveraging its proprietary data analytics and advanced digital marketing system, TuanChe’s demand-side precision search platform helps industry customers increase the efficiency and effectiveness of their advertising placements. For more information, please contact ir.tuanche.com.

For investor and media inquiries, please contact:
Dana Cheng
Investor Relations
Tel: +86 10 6398 4292
Email: yu.cheng@tuanche.com

   
TUANCHE LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amount in thousands, except as noted)
   
    As of,  
    December 31,2017   September 30, 2018  
    RMB
  RMB
Unaudited
  US$
Unaudited
 
ASSETS              
Current assets:              
Cash and cash equivalents   66,695   470,513   68,508  
Restricted cash   11,108   24,077   3,506  
Accounts receivable, net   8,467   42,188   6,143  
Prepayment and other current assets   16,181   40,347   5,873  
Receivables due from related parties   2,260   1,000   146  
Held-for-sale assets   837   -   -  
Short-term investments   4,000   -   -  
Total current assets   109,548   578,125   84,176  
Non‑current assets:              
Property, equipment and software, net   938   8,709   1,268  
Long-term investments   1,000   5,004   729  
Other non-current assets   1,349   873   127  
Total non‑current assets   3,287   14,586   2,124  
Total assets   112,835   592,711   86,300  
LIABILITIES AND INVESTED EQUITY              
Current liabilities:              
Accounts payable   3,340   2,955   430  
Advances from customers   9,751   26,048   3,793  
Short-term borrowings   24,971   34,131   4,970  
Salary and welfare benefits payable   41,297   32,446   4,724  
Tax payable   21,476   11,012   1,603  
Other current liabilities   29,047   5,496   800  
Convertible loans   41,165   -   -  
Held-for-sale liabilities   -   -   -  
Total current liabilities   171,047   112,088   16,320  
Non-current liabilities:              
Warrant   2,818   -   -  
Long-term borrowings   2,932   -   -  
Total non-current liabilities   5,750   -   -  
Total liabilities   176,797   112,088   16,320  
               


 
TUANCHE LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(Amount in thousands, except as noted)
 
    As of,
    December 31,2017   September 30, 2018
    RMB
  RMB
Unaudited 
  US$
Unaudited 
MEZZANINE EQUITY:            
China Best Reach Co., Limited redeemable shares   1,947     2,016     294  
Series A convertible redeemable preferred shares   6,048     6,389     930  
Series B-1 convertible redeemable preferred shares   9,429     9,703     1,413  
Series B-2 convertible redeemable preferred shares   41,831     44,260     6,444  
Series C-1 convertible redeemable preferred shares   16,498     17,278     2,516  
Series C-2 convertible redeemable preferred shares   167,869     183,412     26,705  
Series C+ convertible redeemable preferred shares   92,451     97,515     14,198  
Series C-4 convertible redeemable preferred shares   -     44,026     6,410  
Series D-1 convertible redeemable preferred shares   -     155,563     22,650  
Series D-2 convertible redeemable preferred shares   -     343,153     49,965  
TOTAL MEZZANINE EQUITY:   336,073     903,315     131,525  
Shareholders’ deficit:            
Class A ordinary shares   25     41     6  
Class B ordinary shares   35     35     5  
Treasury stock   -     -      
Additional paid-in capital   -     33,703     4,907  
Accumulated deficit   (389,326 )   (454,812 )   (66,222 )
Accumulated other comprehensive loss   (10,769 )   (1,659 )   (241 )
Total shareholder’s deficit     (400,035 )   (422,692 )   (61,545 )
TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' DEFICIT     112,835     592,711     86,300  
             


 
TUANCHE LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS 
(Amount in thousands, except per share data)
 
    For the three months ended September 30,  
    2017
  2018
 
    RMB
  RMB
  US$
 
               
Continuing operations
Net revenues
             
Auto shows   72,384     153,570     22,360    
Group-purchase facilitation   2,974     -     -    
Virtual dealership and others   -     1,702     248    
Total net revenues   75,358     155,272     22,608    
               
Cost of revenues   (25,106 )   (46,217 )   (6,729 )  
               
Gross profit   50,252     109,055     15,879    
               
Operating expenses:              
Selling and marketing expenses   (61,020 )   (119,494 )   (17,399 )  
General and administrative expenses   (6,360 )   (22,982 )   (3,346 )  
Research and development expenses   (4,350 )   (5,484 )   (799 )  
Total operating expenses    (71,730 )   (147,960 )   (21,544 )  
Loss from continuing operations    (21,478 )   (38,905 )   (5,665 )  
Other expenses:              
Interest expenses, net   (610 )   (308 )   (45 )  
Exchange (loss)/gain   (69 )   725     106    
Investment income/loss   -     (246 )   (36 )  
Change in fair value of warrant   -     (338 )   (49 )  
Others, net   (22 )   (69 )   (10 )  
Loss from continuing operations before income taxes   (22,179 )   (39,141 )   (5,699 )  
Income tax expense   -     -     -    
Net loss from continuing operations   (22,179 )   (39,141 )   (5,699 )  
Discontinued operations              
Gain from disposal of discontinued operations before income taxes   -     -     -    
Loss from discontinued operations before income taxes   (1,846 )   -     -    
Income tax expense, net   -     -     -    
Net (loss)/income from discontinued operations   (1,846 )   -     -    
Net loss   (24,025 )   (39,141 )   (5,699 )  
   
   
   
TUANCHE LIMITED  
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)  
(Amount in thousands, except per share data)
 
   
    For the three months ended September 30,  
    2017
  2018
 
    RMB

  RMB

  US$

 
Accretions to preferred shares redemption value   (6,091 )   (11,262 )   (1,640 )  
Net loss attributable to the TuanChe Limited’s shareholders   (30,116 )   (50,403 )   (7,339 )  
Net loss   (24,025 )   (39,141 )   (5,699 )  
Other comprehensive (loss)/income:              
Foreign currency translation adjustments   (991 )   6,014     876    
Total other comprehensive (loss)/income   (991 )   6,014     876    
Total comprehensive loss   (25,016 )   (33,127 )   (4,823 )  
Accretions to preferred shares redemption value   (6,091 )   (11,262 )   (1,640 )  
Comprehensive loss attributable to the TuanChe Limited's  shareholders   (31,107 )   (44,389 )   (6,463 )  
Net loss attributable to the TuanChe Limited’s ordinary shareholders per share from continuing operations              
Basic   (0.30 )   (0.47 )   (0.07 )  
Diluted   (0.30 )   (0.47 )   (0.07 )  
Net (loss)/earning attributable to the TuanChe Limited’s ordinary shareholders per share from discontinuing operations              
Basic   (0.02 )   -     -    
Diluted   (0.02 )   -     -    
Weighted average number of ordinary shares              
Basic   94,870,580     106,922,742     106,922,742    
Diluted - continuing operations   94,870,580     106,922,742     106,922,742    
Diluted - discontinuing operations   94,870,580     -     -    
                     


 
TUANCHE LIMITED
UNAUDITED RECONCILIATION OF NON-GAAP AND GAAP RESULTS
(Amount in thousands, except per share data)
 
    For the three months ended September 30,  
    2017
  2018
 
    RMB
 
  RMB

  US$
 
 
Net Loss   (24,025 )   (39,141 )   (5,699 )  
Add :              
Depreciation and amortization   244     323     47    
Interest expense, net   610     308     45    
EBITDA   (23,171 )   (38,510 )   (5,607 )  
Add :              
Fair value loss of warrant   -     338     49    
Share-based compensation expenses   630     30,614     4,457    
Adjusted EBITDA   (22,541 )   (7,558 )   (1,101 )  
               
Net Loss   (24,025 )   (39,141 )   (5,699 )  
Add :              
Fair value loss of warrant   -     338     49    
Share-based compensation expenses   630     30,614     4,457    
Adjusted Net Loss   (23,395 )   (8,189 )   (1,193 )  
               
Weighted average number of ordinary shares              
Basic   94,870,580     106,922,742     106,922,742    
Diluted   94,870,580     106,922,742     106,922,742    
Adjusted net loss per share from continuing operations              
Basic   (0.25 )   (0.08 )   (0.01 )  
Diluted   (0.25 )   (0.08 )   (0.01 )