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TuanChe Limitd. - Solid 3Q-2018 Performance Sustained by Market Penetration

NEW YORK, NY / ACCESSWIRE / December 19, 2018 / TuanChe (TC):

Brief Review

TuanChe (TC) reported 3Q-2018 net revenue of RMB 155.3 million (USD $22.6 million), a YoY increase of 106.0%. Net loss attributable to ordinary shareholders was RMB 50.4 million (USD $7.3 million), a YoY increase of 67.4%, and diluted net loss per share was RMB 0.47 (USD $0.07), a YoY increase of 56.7%. However, non-GAAP net income attributable to ordinary shareholders, adjusted by GAAP required items including share-based compensation, net fair value of warrant, was RMB 8.2 million, a YoY decrease of 65.0% and non-GAAP diluted net loss per share was RMB 0.08 (USD $0.01), a YoY decrease of 68.0%.

Result Highlights

Expanding geographic coverage driving solid revenue growth

For the third quarter of 2018, TuanChe recorded a solid net revenue growth of 106% YoY to RMB 155.3 million, compared to net revenue of RMB 75.4 million in year-ago period, mainly due to rapid expanding geographic coverage in the lower tiers cities in China as a result of increased offline auto shows organized. The number of auto shows organized by the company grew 169.7% to 205 in 3Q-2018 from only 76 in 3Q-2017. Meanwhile, the geographic coverage has been spanned from 43 cities across the country in 3Q-2017 to 122 cities in 3Q-2018, up 183.7% YoY. Given unrelenting expansion of auto show footprints in lower tier cities, the company is expected to double up auto shows to benefit from the economics of scale, which in tune boost sustained revenue growth in the near future.

Optimistic outlook on the back of effects of seasonality

Due to the consumption habits of Chinese automobile consumers and automakers' marketing plans, the management provided a positive guidance with strong upside potential of a 101.8%-119.3% YoY increase in net revenue for the fourth quarter of 2018, or RMB 230 million to RMB 250 million, implying a year over year net revenue growth rate of 2018 in a range of 133.2% to 140.4%.

Diversifying revenue streams supported by virtual dealership and demand-side platform business

Lacking market presence and elevated marketing costs and distribution costs are two major obstacles for automakers and automotive dealerships to expand market penetration in the lower tier cities, especially in weak car sales over the past months in China. However, driven by the growing footprints of lower tier cities across the country and the massive network of over 10,000 industry customers, TuanChe is poised to provide precision marketing service for automaker, dealers and other automotive-related industry customers by leveraging its proprietary customer intelligence.

As of September 30, 2018, the virtual dealership and others contributed RMB 1.7 million revenues, since the company launched the service in June 2018. Once the operation ramps up, the initiative is expecting to materially enhance the company's revenue by adding other automotive value-added service, including automotive financing service, aftermarket service, and automotive insurance and warranty service. In addition, the company embarked on a new advertising service for its industry customers through the demand-side platform in 2018 by leveraging its big-data analytic capabilities. Overall, such initiatives coupled with its transaction-driven online-merged-to-offline business model are expected to establish a closed-loop ecosystem and to bolster the company's revenue growth momentum on top of the auto show segment revenues growth over the mid-to-long term.