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Yahoo
06-06-2025
- Business
- Yahoo
Bowman Announces Authorization of New $25 Million Share Repurchase Program
RESTON, Va., June 06, 2025 (GLOBE NEWSWIRE) -- Bowman Consulting Group Ltd. (NASDAQ: BWMN) ('Bowman' or the 'Company'), a national provider of technical engineering and program management services, today announced the authorization by its Board of Directors of a new share repurchase program under which the Company may repurchase up to $25 million of its common stock over the next 12 months commencing June 9, 2025. This new authorization replaces the Company's stock repurchase authorization, which terminates on June 6, 2025. Bowman intends to continue to prioritize organic and acquisitive growth as part of its strategic growth initiatives. The timing and amount of any share repurchases will be determined by management at its discretion based on several factors including share price, market conditions and capital allocation priorities. Shares may be repurchased from time-to-time through open market purchases, in privately negotiated transactions or by other means, including the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions. The new share repurchase program does not obligate Bowman to acquire a specific number of shares of common stock and may be suspended, modified or discontinued at any time without notice. About Bowman Consulting Group in Reston, Virginia, Bowman is a national engineering offering infrastructure, technology and program management solutions to owners and operators of the built environment. With over 2,400 employees in 100 locations throughout the United States, Bowman provides a variety of planning, engineering, geospatial, construction management, commissioning, environmental consulting, land procurement and other technical services to customers operating in a diverse set of regulated end markets. Bowman trades on the Nasdaq under the symbol BWMN. For more information, visit or This press release may contain forward-looking statements within the meaning of the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. All statements contained in this press release other than statements of historical fact, including statements regarding the date of commencement and expiry of the share repurchase program, the amount of shares to be repurchased, the method of the share repurchases, if any, pursuant to the share repurchase program and the anticipated execution of the repurchase program consistent with the Company's strategic initiatives described above are forward-looking statements and represent our views as of the date of this press release. The words 'anticipate', 'believe', 'continue', 'estimate', 'expect', 'intend', 'may', 'will', 'goal' and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to several assumptions and risks and uncertainties, many of which involve factors and circumstances that are beyond our control that could affect our financial results. The Company cautions that these statements are qualified by important factors that could cause actual results to differ materially from those reflected by the forward-looking statements contained in this press release. Such factors include: (a) changes in demand from the local and state government and private clients that we serve; (b) general economic conditions, nationally and globally, and their effect on the market for our services; (c) competitive pressures and trends in our industry and our ability to successfully compete with our competitors; (d) changes in laws, regulations or policies; and (e) the risk factors set forth in the Company's most recent SEC filings. Considering these risks, uncertainties and assumptions, the future events and trends discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated or implied in any forward-looking statements. Except as required by law, we are under no obligation to update these forward-looking statements after the date of this press release or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements. Investor Relations Contact:Betsy Pattersonir@ General Media Contact: Christina Nicholspr@ in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
22-05-2025
- Business
- Yahoo
Q1 2025 iQIYI Inc Earnings Call
Chang You; Director of Investor Relations; iQIYI Inc Yu Gong; Chief Executive Officer, Director; iQIYI Inc Jun Wang; Chief Financial Officer; iQIYI Inc Xiaohui Wang; Chief Content Officer; iQIYI Inc Xueqing Zhang; Analyst; CICC Vicky Wei; Analyst; Citi Maggie Ye; Analyst; CLSA Operator Thank you for standing by, and welcome to the iQIYI first quarter 2025 earnings conference call.I would now like to hand the conference over to Ms. Chang You. Please go ahead. Chang You Thank you, operator. Hello, everyone, and thank you for joining iQIYI's first quarter 2025 earnings conference call. The company's results were released earlier today and available on the company's Investor Relations website at the call today are Mr. Yu Gong, our Founder, Director and CEO; and Mr. Jun Wang, our CFO; Mr. Xiaohui Wang, our CCO, Chief Content Officer; Mr. Youqiao Duan, Senior Vice President of our Membership Business; and Mr. Xianghua Yang, Senior Vice President of Movies and Overseas Business; and Mr. [Fan Liu], Senior Vice President of Brand Advertising Gong will give a brief overview of the company's business operations and highlights, followed by Jun, who will go through the financials. After the prepared remarks, the management team will participate in the Q&A we proceed, please note that, the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the US 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 SEC. iQIYI does not undertake any obligation to update any forward-looking statements, except as required under applicable law.I will now pass on to Mr. Gong. Please go ahead. Yu Gong Hello, everyone, and thank you for joining us today. We delivered a solid first quarter, gaining sequential growth in both total revenues and progress. This was built on a strong rebound in our long-term premium content and strategic investments in vertical format macro expected cementing its position as a go-to platform for users, making seamless plans of long-form and short-form entertainment, creating exciting opportunities for future commercialization. And this will strengthen our confidence and commitment to drive even deeper upgrades across our business model, and the content ecosystem in response to evolving market and user the core long-form video content, we are committed to delivering, engaging and soft after tariff as we left in our strong IR of top-tier drama, notably, drifting away from our flagship man-on-site brand surpassed the 10,000 iQIYI popularity index score, where the Hunters drama will do one more slide mistakes, right? Financial both achieved the score of over 9, ahead, we are dedicated to focusing on premium content with a strong commercial value, while also upholding excellence. Additionally, we will further enhance our certain production mechanism to deliver stronger, faster test and more additive storytelling that rebounded strongly with the user-centric approach, we are confident in our ability to and reach our full creative potential and foster our work tools, content ecosystem for micro dramas. We made notable programs on HG Life micro dramas, now second in terms of daily time depend and first in the number of daily unique clearly shows the growing appeal in capital rating orders, reinforcing our confidence in further unlocking their full potential. Moving forward, we are committed to expanding our macro drama portfolio, placing a strong appetite on premium micro dramas by enhancing original production and acquisition capabilities. At the same time, we aim to effectively monetize that are growing traffic on advertising and our content ecosystem, we are leveraging technical innovation to improve user experience. Standout even is a launch of our AI power in feature. We transform our users engaged with long-form videos with a simple swap up or down on their mobile screen, users can effortlessly escape between key highlights, each at without missing an exciting moment, delivering a user-centric my Alzheimer like experience tailored to the state willing habits. Highlight points are generated by AI best videos and personalized behaviors of each all investors are aware, the market is becoming increasingly unpredictable as it continues to evolve. However, in fact, volatile environment, the ability to create sustainable value is emerging as a realm and valuable asset with this in are wrapping up our investments in strategic areas such as enriching our content ecosystem and enhancing the user experience. While this investment may lead to short-term costs that are designed to deliver long-term benefits. Now let's move on to the details of our core business with long-form videos, which serves as the conviction of our content ecosystem. We maintained leadership in the core drama category as the current top part in terms of total viewership market share during the quarter, accounting to enlightened strong performance was highlighted by breakthrough in our Jacobs specific cellular note as we have now template 5 in Signature brands, each future on content genres. In the suspense general, our brand achieved a remarkable milestone with a release of drifting away is first title to surpass that 10,000 popularity in a score. It also generated the third heaviest single episode revenue in our history, just behind mega hit, The Snow Cloud on Hongmiao and My Heroic Husband, Pei Roman general on Laban Delta Mianne Zhutang brand made notable progress in this quarter, expanding our portfolio of content appeals for female audiences with relief of four captivating titles. Notably, our in-house produced fantasy drama, Modern Life, Mystic. Baiyue Fanxin garnered an impressive popularity in-depth score of over 9,600. Our modern romance drama, The Best of Sea, anime was not only a success in the domestic market, but also the best-performing modern drama, sea drama on our overseas platform drama and Chinese our masterpiece theater, (inaudible) specializing in theater adaptation and realistic stories they build it first title North work. This summer adapted from a modern literature, a wide winning novel has further strengthened our reputation for popular our micro custom theater, (inaudible) and the locked-on theater, Xiaozhou Yuchang, are focused on innovative drama series with fewer episodes and comedy respectively. Building on the success of past hits such as To the Wonder, without a Time and The Great Novel Day, I want to be a point of this brand are set to release an exciting line after this to movies. We continue to dominate the category during the quarter with the highest viewership market share according to investment. Premium content has a strong long-tail effect. In example, as the success of Ninja 2 during Chinese New Year. The firm boosted viewership of the original Ninja, making its most-watched movie on our platform this quarter. In addition, our original production, Bleed for past logo, achieved the strong revenue and viewership, especially among male users drawn to action and crime already showed during the first quarter our flagship multi-phased IP become a final season fleet -- made a strong comeback, sustaining strong traffic and positive word-of-mouth. Our brand-new IP, The Blooming Journey -- Fanhua, excelled with a peak popularity index score of over 8,000, attracting audiences in lower-tier cities and among older audiences beyond commercial variety show terms of animation, during the first quarter, we continue to improve our production capabilities. Key titles such as Super Cubed, Changli Huang and the Rufu: Season 2. Rofu generated positive user feedback during the on to our content strategy and the pipeline. In our core drama category, our focus is on creating a well-balanced content mix that aligns commercial success with artist excellence. We are committed to three key genres: realistic, suspense and female-focused cater to the pace of viewing habits, we are enhancing our content creation strategies. This includes reducing the episode cost for long-form dramas and increasing the number of high-quality short dramas, with each episode lasting 5 minutes to 20 minutes. This change will expand the value of diversity of our offering, enrich the user experience, and drive deeper audience drama pipeline features an exceptional lineup of top-tier content. We already released the Demand Hunter's rawness and lobbying daily, while retouching, gathered widespread acclaim. Adding to the excitement, the highly anticipated field -- A Dream within a Dream, Shuyuan Yima, will be released the first general, our renowned Light on Celltrac brand recently debuted Breaking the Shadow, and Life for Life Generation, that can also look forward to upcoming release, including justifiable defense and the Born with Luck, each adapted from the renowned novel Low IQ Crime. Additionally, the new science fiction suspense drama, what a Wonderful World, Zaiyun Jian will be released shortly as well. Our lineup of realistic drama includes highly anticipated titles, such as The Shrine, Slime, Shuanghu and Gaoxing among movies, we are increasing investments in original production, focusing on geological releases with strong box office potential. Notably, our original production, Momo, has already achieved the box office revenue of over RMB140 have six more titles scheduled for theatrical release throughout the rest of the year, including The Shadow's Edge -- Additionally, we are boosting support for online movies with revenue-sharing models. Our diverse line-up includes eight original online movies, such as Ultimate Michelin, (spoken in foreign language) Martial Arts, covering comedy and licensed theatrical movies, we launched several hits, including Legends of the Call Door Pharaoh and Detective Chinatown 1900, both of which have successfully the article ranks during the Chinese New Year and are now performing well on our variety of shows we will maintain our focus on producing top-quality programs while introducing exciting new content. This includes sequels to a beloved classic like HAHAHAHAHA and The Lack of China 2025, alongside fresh IPs such as SING! ASIA, and the Reality Show is now as well as Wexiao, Yihaiwei, building on the success of The Blooming Journey. We also plan to launch a second season speaker in this animation, we are dedicated to increasing revenue contribution from original productions, especially high-quality Chinese animation. We also aim to broaden our collection of enduring sales and optimize our operations to maximize iQIYI value. Major titles to be launched include animation over the Divine, Reals (spoken in foreign language) Ambrose. Moreover, we are excited to announce that, the highly acclaimed Japanese animation, One Piece -- has resumed airing for a dedicated fun children's content, we will concentrate on IP commercialization and developed a comprehensive iQIYI ecosystem that spans the entire lifecycle, offering all age services tailored to parents, child audiences. Anticipated title includes Princess Doremi: Season 4, Belle Squad: Season 4. (inaudible)Moving on to macro dramas, which have demonstrated the potential within our content ecosystem, harnessing this powerful momentum. We are poised to amplify our investments in micro drama content and strengthening user acquisition efforts. We have three key objectives, starting with assessing our user base and boosting business resilience by increasing micro dramas into our content we perceive micro dramas as a catalyst for attracting new users and driving membership revenue growth, especially in under the lower-tier cities and among older we are actively exploring monetization opportunities for our micro drama initiatives, such as advertising and commerce. We have successfully achieved the first objective by revamping our apps and rapidly expanding our micro drama portfolio to over 15,000 titles have available for free, and the other half inclusive to members. We've backed us positioned differently in terms of design and targeted audience. The main iQIYI app focuses primarily on long-form videos and mainly uses a subscription model, with micro dramas serving as a complementary value iQIYI app, a primary focus on free micro dramas and monetize them soon advertising and e-commerce. This meaningful progress have driven impressive growth in both daily viewing time and unique data for micro dramas with substantial increases of over 300% and 110% respectively when comparing the April to the future, iQIYI Live will be represented as iQIYI micro dramas, and we are confident that, this transformation will tap into its full potential. We pioneered the concept of dedicated Chinese New Year place for micro dramas, releasing 28 premium titles, hits like My Sweet Home (spoken in foreign language) and Please Come into My Heart, by consistently delivering premium content, we are reinforcing our position as the go-to platform for micro the micro drama industry continues to evolve, the growing user demand for premium titles aligns perfectly with our core strengths with expertize in premium content, a trusted brand and a loyal user base. We are uniquely positioned to capitalize on this trend. Coupled with our extensive resources, talent, teams and advanced technologies, we deliver unique value to the micro drama that end, we are continuously enhancing our ability to produce original micro drama, while exploring innovative genres to broaden our content offerings. These initiatives include notable projects such as adaption around 100 classic Hong Kong movies and producing an extensive series of legal educational content, all to be developed as micro dramas. Additionally, we are integrating technologies like AI and the workflow production to improve both efficiency and on this initial piece, we are collaborating with partners to foster our thriving industry ecosystem. In March, we hosted the first Micro Drama Delivering Light, a ceremony, bringing together hundreds of main actors, creators and industry professionals. The event sparked meaningful interest from attendees eager for future collaboration. As the first-ever ceremony dedicated to the micro drama industry. It not only enhanced our profile but also reinforce our role as a key industry on to membership services. Revenue regained growth momentum during the quarter, increasing 7% sequentially to RMB4.4 billion, which was healthy growth in subscriber base in Q1, supported by the strong performance of key titles such as DRIFTING AWAY, Moonlight, Nystic, and Not War. Average revenue per member remains healthy, thanks to our improved operating strategy is focused on developing a membership business that caters to a broad audience, expands our subscriber base, delivers enhanced value and ultimately accelerate revenue growth. As the core of membership business is exceptional content, we strive to boost both member acquisition and retention by maintaining a consistent flow of premium long-form content and engaging macro continue strengthening our membership plans, delivering value to our members, we are refining product position in collaboration to connect with our user base. The family-oriented premium ad diamond plan saw excellent growth after we introduced free unlimited express package, our ad-supported basic membership plan designed to offer exceptional value and a lower price, which are the historic adoption of high younger generation and users from low-tier cities with this and new members with many joining as first-time subscribers. We are focused on enhancing macro value soon initiatives that boost loyalty and drive members now enjoy greater discounts while premium as the members receive free prize package to drive conversions with expanded options like Express package, counterfeit Express program -- who purchases gift cards and bundled membership plans with added benefits, these steps make all membership services more attractive and valuable, supporting steady revenue growth and strong membership on to the advertising business. Advertising revenue in the first quarter decreased sequentially to RMB1.3 billion, other than the macro pressure Q1 and typically low season compared to Q4. For brand ads, our top-tier dramas and the brand-new shows remain a strong draw for advertisers. With content-driven ads contributed over half of the revenue. Note that the sequel to our classic IP become a -- suite lead advertising sales, while the new IP a growing journey and the fantasy platform more than likely to generate widespread positive ahead, brand ads are showing encouraging signs of our potential rebound driven by premium content We plan to drive ourselves by leveraging premium dramas and the genre's prolific sales repress. For -- shows, we have our focus on delivering high-impact projects and expanding vehicle opportunities for classic IP. Additionally, we aim to launch a mining type, media warranty show, micro dramas and customized advertising products, providing innovative and tailored advertising a performance ad side, we captured budgets from new high-potential customers in the Internet services and the education sector, further diversifying our advertising service. In addition, incorporating API into advertising content creation has boosted ROI by over 20%, compared to apps developed with our AI. The future focus is on continuously enhancing our technologies and capabilities to drive revenue growth across Internet services, e-commerce, gaming and education. Furthermore, we plan to seize growth opportunities in micro dramas and deepen the integration of AI, maximize monetization commitment to enhancing ad efficiency is further demonstrated by the recent launch of our API driven -- ad placement platform by integrating results from both our long-form and the micro genre ecosystem. This platform empowers both brands and performance us with sophisticated smart marketing on to technology and products. We continue to advance video production through industrialization, enhancing cost efficiency and creativity. For example, by scaling up the reuse of digital assets in major original dramas like (spoken in foreign language). Moreover, our interest is to reach dubbing solutions designed to convert emotions of same tier cities -- have already been applied to the English language for both long form and macro the user front, we are hiring -- AI will be define the unmet experience in addition to a newly junk measurement AI. They also used other AI products to enhance user engagement on AI part chatbot, launched last April, features around one from our AI from our popular IPs and have engaged with users of over 100 million. Recently, we introduced the more assistant within the prime form. The uses to discover content discuss plot and the control we launched our senior-most feature tailored for motor users, complementing on earlier call designed for younger audiences. Moving on to our business performance in regions outside of midlife China, we maintained strong growth momentum in the first quarter. We saw revenues increasing by over 30% year-over-year on the average daily number of subscribing members, reaching a new we are thrilled to see dramas, gaining traction with our wider global audiences according to Google Trend Data worldwide search for the drama recently reached a five-year high even surpassing first for Korean drama. Our original production has planned a key role in this growing international appeal, with four of the top 10 overseas dramas in the past six months, coming from iQIYI or modern drama, the best team that wears on our international platform is publishing a new revenue benchmark for this our original Chinese animation Super also achieved the highest single-day revenue for Chinese animation within the first week of over six release. The influence of our premium content from advertising revenues by 48% year-over-year on original time drama, gained as potential traction from brand advertisers, while our Chinese show become a farmer also to interest from overseas ahead, we are focused on expanding our investment in original production to create high-quality content tailored to international audiences while integrating micro dramas into our global portfolio. At the same time, we aim to deepen collaboration with local partners and further enhance our brand improvement across key but not least, achieved consistently pushed the rate of business innovation as evidenced by our pursuit of new opportunities and exploration of untapped relevance. We are leveraging part digital technologies to think lastly integrate of our IPs, extending their life cycle and unlocking greater commercial recently expanded our footprint to off-line experience park, the first iQIYI land is set to open in Hangzhou another with a second project underway in addition of VR immersive shelters are expanding rapidly, future popular IPs such as lower young, are now available in over 50 stores of near 30 believe this immersive entertainment insurances will deepen user engagement with our content and IPs. On the e-commerce front, the breadth of new content formats such as micro dramas, combined with construction the vertical content, has used significant opportunity in the extra to on these opportunities, we have launched trail operations from iQIYI e-commerce by leveraging our rebound iQIYI portfolio, intensive artist resources and a high-quality member banks. We hold distinct advantage in this space this year. We are concentrating on building for foundation from content-driven e-commerce with a goal of driving accelerated growth and in the year summary, as a vital entertainment industry continues to involve, we remain committed to investing in our content ecosystem and elevating the user experience. This is a strategic effort will enable us to accelerate our content flywheel will strengthen resilience, an afore foundation for sustainable growth and deliver long-term value to our let me part on Jun for our financial performance. Jun Wang Thank you, Mr. Gong, and hello, everyone. Now let's take a look at the Q1 key numbers. In the first quarter, total revenues were RMB7.2 billion, up 9% sequentially. Membership services revenue reached RMB4.4 billion, up 7% sequentially. The increase was primarily driven by the strong performance of the long-form advertising revenue decreased by 7% sequentially to RMB4.3 billion, primarily due to macro headwinds and seasonality. Accounting distribution revenue reached RMB28.7 million, up 55% sequentially, driven by more common titles distributed during the quarter. Other revenues increased by 24% sequentially to RMB830.9 million, primarily driven by the growth of certain business on to costs and expenses. Content cost was RMB3.8 billion, up 10% sequentially, driven by higher number of premium dramas launched during the quarter. Total operating expenses were RMB1.4 billion, up 8% sequentially, primarily driven by higher marketing spending. Turning to profit and cash flow. Our non-GAAP operating income was RMB458.5 million, up 13% on a sequential non-GAAP operating margin was 6%. The net cash provided by operating activities totaled RMB339 million, positive for 12 contractual quarters. As of the end of the first quarter, we had cash, cash equivalents, restricted cash, short-term investments, and long-term restricted cash included in the prepayments and other assets, the total of RMB5.7 addition, the company had a loan of USD522.5 million to PAG, recorded under amounts due from other parties. When reviewing our financial performance, the result of our efforts to optimize the capital structure are very clear. Over the past two years, we have onetime the scope through a serious initiative to lower our debt levels, optimize repayment schedules and make our debt restructure more the outstanding principal balance of our convertible bond has sharply declined, dropping from RMB2.9 billion at the end of first quarter back in 2023 to RMB1.17 billion this year. And of the current outstanding balance, the rate RMB522.5 million, as we mentioned earlier, were resolved through equipment loan arrangements with we continue to optimize that debt structure, we have also achieved a substantial reduction in net interest expense, which has declined from RMB223 million to RMB155 million in the first quarter of this year decreased by over [30%] detailed financial performance and data, please refer to our press release on our IR we will open the floor for Q&A. Operator (Operator Instructions) Xueqing Zhang, CICC. Xueqing Zhang (spoken in foreign language)(interpreted) Thanks for taking my question. My question about micro dramas. Gong mentioned some operational updates on micro dramas in your prepared remarks. Could management elaborate a little more on the latest developments of micro dramas and outline the key focus points for its future development? Thank you. Yu Gong (spoken in foreign language) Chang You Our CEO, Mr. Gong, is answering this question. First of all, the users have gradually developed the habit of watching micro dramas on iQIYI. We now have over 15,000 micro dramas titles with free content and a member-exclusive content about tax. Our two mobile apps have also developed very tenanted positioning. The main iQIYI app focuses on members who are for free model, primarily using paid micro dramas, while the IiQIYI Light App primarily focuses on free micro dramas supported by advertising. Yu Gong (spoken in foreign language) Chang You This development, as I mentioned earlier, have driven data growth in both user time spend and user base for micro dramas, while significantly enhancing the user stickiness. So when we compare the April to December of last year, the number of heavy micro dramas users on iQIYI, which are users will spend 80% of their time watching micro drama has increased about 3 times. Yu Gong (spoken in foreign language) Chang You We just step into the micro drama field for not so long and then just started our original production and seeing some impressive proper for example, a recently released original micro drama called [China capable sporting] ranks first in iQIYI's micro drama busing time for several competitive consecutive weeks and also successfully entered the EDX top 10 list, which is well renowned list in the micro drama amount the acquired top-tier titles, for example, like My Sweet Home and Please Come into My Heart to worldwide each achieved revenue-sharing milestone of over RMB1 million within a week, and this progress reflecting the high user recognition and appreciation of high-property in micro dramas. Yu Gong (spoken in foreign language) Chang You I would like to share with everyone. For example, the content cost for each micro drama on average cost less than RMB1 million. And the top-tier titles usually will be less than RMB2 million per title. Yu Gong (spoken in foreign language) Chang You So as such, within the week, the revenue share dollar RMB reached 1 million is actually a very sizable and on income. Yu Gong (spoken in foreign language) Chang You Going forward, there are two areas we're focusing on. First is to have more and better-quality micro dramas, and second, to invest more on user acquisition user form. Yu Gong (spoken in foreign language) Chang You In addition, we'll try more ways to monetize the growing traffic, for example, advertising and also commercial. Operator Vicky Wei, Citi. Vicky Wei (spoken in foreign language)(interpreted) Thanks management for taking my question. Will management share some color about the change of loan video content strategy and the rationale behind it? Thank you. Chang You Thank you. I will invite our Chief Content Officer, Mr. Xiaohui, to answer this question. Xiaohui Wang (spoken in foreign language) Chang You (interpreted) First of all, long-form video are the cornerstone of iQIYI's content ecosystem and our commitment to this remains unwavering. Xiaohui Wang (spoken in foreign language) Chang You Dramas are at the core of long-form videos. So to better cater to involving user preferences, our future drama strategy will focus on two key areas. First of all, releasing high-quality shorter episode premium dramas and second, producing more high-quality short dramas with each episode lasting 5 minutes to 20 minutes. Xiaohui Wang (spoken in foreign language) Chang You Going forward, the total number of drama titles will increase, accompanied by enhanced content quality and greater diversity. This approach will not only improve the flexibility and stability of content settling but will also reduce reliance on individual titles and effectively mitigate risk. Operator Maggie Ye, CLSA. Maggie Ye (spoken in foreign language)(interpreted) Would just please share more details on the latest of our overseas business such as membership and content distribution as well? From a financial perspective, what is the current situation of the overseas business in terms of revenue and profit contribution? And how should we expect from -- what shall we expect from overseas in the next one years to three years? Yu Gong (spoken in foreign language) Chang You We started our overseas business in the second half of 2019. And after that, we experienced three years of COVID. So, there were some difficulties in terms of getting head count and also trouble them between Mainland China and overseas. So the development were actually quite slower than expectation. But after COVID, in the recent two years, the business has been going through a very rapid development phase. But however, we do have some restrictions in terms of the financial resources, so there is some limitations to the development. Yu Gong (spoken in foreign language) Chang You In addition to what I mentioned in the opening remarks that we experienced very rapid growth in terms of the annual revenue growth and also subscriber account, et cetera. So there are some very important progress we made very importantly that we kind of figure out the right content mix for each region, overseas. And also, what can we do from the content mix to drive user growth and also to drive our revenue performance. Yu Gong (spoken in foreign language) Chang You In addition to that, we also take out how we can really operate in each region, for example, how we can promote our content to acquire a better user growth and also in terms of the user growth, how we can improve that as well. Yu Gong (spoken in foreign language) Chang You In terms of the content mix for our overseas business, the Chinese content actually accounts for about half of the content and the other half are a company. Yu Gong (spoken in foreign language) Chang You Based on the data that we collected, the Chinese video content actually devalued that are increasing in the global, which is very beneficial to our overuse business growth. Yu Gong (spoken in foreign language) Chang You Right now, currently, the revenue contribution from the overseas market is still at a relatively low percentage, but it also depends on the future investment into the overseas business, limited to, for example, the scale of our financial support and also the financing source. So, these are the areas where we look out for the overseas business. Jun Wang (spoken in foreign language) Chang You As the CFO just added to our CEO's comments, so we really took from the past few years are really valuable revenue growth, as well as the content mix as well as the operating takeaways from each market, and these are the key takeaways in the past few years. Of course, these are under a very disciplined investment cycle that we did over the past few years as from the management accounting perspective, the overseas business are profitable in the past couple of years. And in the future going forward, of course, maintaining our profitability it's important. However, it doesn't have to be a meaningful amount. What we want is to invest, take that profit and invest into the business. Hopefully, it will drive greater growth opportunities in the future. Operator There are no further questions at this time. I'll now hand back to management for closing remarks. Chang You Thank you, everyone, for participating on the call today. And if you have any questions, don't hesitate to contact us. Thank you and see you next quarter. Yu Gong Thank you. Operator Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect. Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the company sponsoring this event.
Yahoo
22-05-2025
- Business
- Yahoo
Q1 2025 WeRide Inc Earnings Call
Tony Han; Chairman of the Board, Chief Executive Officer, Founder; WeRide Inc Jennifer Li; Chief Financial Officer; WeRide Inc Joel Ying; Analyst; Nomura Tim Hsiao; Analyst; Morgan Stanley Li Ping Zhao; Analyst; CICC Yawen Tan; Analyst; BMP Paribas Tian Wang; Analyst; China Securities Leo You; Analyst; CLSA Operator Good morning and good evening, ladies and you for standing by and welcome to WeRide's first quarter 2025 earnings conference call. (Operator Instructions)Joining us today are WeRide's Founder, Chairman, and CEO Doctor Tony Han; and CFO Ms. Jennifer we continue, I'd like to refer you to the Safe Harbor statement and the company's earnings press release, which also applies to this call as today's call will include forward-looking statements, including rewrite strategies and future forward-looking statements are made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risk and company's actual results could differ materially from those stated or implied by these forward-looking statements, as a result of various important factors, and please refer to the risk factor section of the company's Form 20-F, filed with the FEC for full disclosure of these risk company does not assume any obligation to update any forward-looking statements except as required under applicable note that all numbers stated in management's prepared remarks are in RMB terms. And we will discuss non-IFRS measures today, which are more thoroughly explained and reconciled to the most comparable measures reported in the company's earnings release and filings with the that, I'll now turn the call over to the company's founder, Chairman and CEO Doctor Tony Han. Please go ahead, sir. Tony Han Hello, everyone. Thank you for joining us today. I'm excited to give you an update on our last quarter. We have reached a number of new milestones as we continue our global expansion and also semantic deeper collaboration with key partners such as basically, with Uber, we have committed to providing global taxi service in 15 additional cities internationally and accept -- and accepted a commitment for an additional $100 million in equity investment on the heels of their initial investment at our notable milestones included launching the first driverless robot taxi testing in Abu Dhabi, the first of its kind in the Middle East. In China, we roll out the country's first autonomous mobility service in the central area of Guangzhou, the number three city in some of this will be reflected in our near-term financial results, others laid the foundation for the robust growth in the quarters to let's quickly discuss our latest Uber announcement. This expanded partnership and the incremental $100 million dollar investment is a testament to our shared commitment to autonomous mobility and the confidence in our operational and technological began our partnership with Uber in the Mideast and they continue to scale our operations there. As a reminder, we first launched Abu Dhabi in December of last year and have recently announced plans to expand in has also been mentions of expansion to a third city recently in the press. So look out for more information there. We are excited by our progress in the region and the opportunities that it addition to the Mid East, we expect to scale and expand our global taxi presence to other geographies such as Europe, with a particular focus on markets, where we have already deployed some of our other autonomous mobility products such as our autonomous believe having multiple autonomous mobility products widens over time and also makes dialogues with stakeholders such as regulators, more substantial cases. We continue to expand our autonomous mobility operations in China and alluded to the earlier, we launched a full driverless robotaxi testing in Abu Dhabi. This means that we will be the first company to have robotaxi running without safety drivers. At the same time, we also expanded our operational service to include the new destinations such as Al Maryah Island and Al Reem Island, covering a range of vibrant areas in the this, you can see in action, our phased approach to operational expansion. This phase approach allows to ensure a high quality of service, while ensuring that we meet all regulatory and safety standards. To date, we have a leading safety track record in the commercial delivery of our China, we expanded our local taxi service in Beijing and Guangzhou. In Beijing, we added the routes between the subcenter of the city, Beijing, Yizhuang, and the Beijing railway station, spanning over 600 square Guangzhou, we launched China's first 24/7 autonomous ride-hailing network and added eight routes in the city center, connecting landmarks and transport hubs such as airport, Guangzhou South Railway Station, Canton Tower, and the Canton Fair Complex. These routes cover more than 250 kilometers of public roads in a densely populated urban area with very busy forward, our local taxi service in China will be integrated into Tencent smart transportation meaning program on WeChat to serve a wider use base in China. We also continue to expand our other autonomous mobility Robobus has entered downtown Guangzhou, one of the most complex urban environments. The development followed our -- follows our launch of the first robust BRT route in the city last has now become an integral part of the day life of Guangzhou citizens who can easily hop on the driverless shuttle in the main district by simply tapping their city pass. It stands a paradigm of the future mobility that we envision, where autonomous vehicles are fully integrated with the local transportation system, enabling safe and seamless movement for the are also making headway in the international market, bringing our products to Switzerland, Spain, and France. In March, our Robobus was granted an operation permit by France, making WeRide, the first and to-date, only autonomous driving company whose products have received operational approvals in five countries, including China, the UAE, Singapore, France, and the and safety are the cornerstones of our success. Our autonomous mobility product all operates atop what we call we ride one and autonomous driving technology platform designed to handle a broad spectrum of operational environments from complex urban settings to full-day functionality and varying weather is proven adaptability. It's proven adaptability in a range of real-world applications provide a fundamental tech advance, tech advantage over our high level of universality of WeRide One has recently demonstrated once again through our [Robo One advertise], which secured Guangdong's first top, first group of driverless testing permits for logistic equipment in less than three months after the product powerful adaptability of rewrite one is further demonstrated by our real-world operations across a broad geographic area. The initial deployment of our AV fleets in a new city can be completed in just a couple of weeks, enabling rapid adoption for our believe safety is the best test of autonomous driving technology. In over 2000 days of operation, our safety records remaining industry leading. Well, we have iterated multiple times. We have not had any accidents attributed to the failure of our autonomous driving systems. Our commitment to safety and transparency is key to earning the confidence of both regulator and also leverage our core autonomous mobility know-how in our ADAS business. In April this year, we announced a partnership with QNX, a division of BlackBerry, to work together to enhance the safety and the reliability of our ADAS integrating QNX OS for safety into our a system we pilot, we ride is helping OEMs and tier-one companies fast track the future of intelligent vehicles.I will now hand over the call to our CFO, Jennifer Li, to discuss our financial results in more details. Jennifer, please go ahead. Jennifer Li Thank you, Tony. Hello, everyone. Before we get into the financials, please know that all amounts are in RMB and all comparisons are on year-over-year basis, unless otherwise let's discuss our first quarter financial performance. Total revenue for the first quarter of 2025 increased 1.8% to RMB72.4 million, primarily driven by the growth in product revenue, which was partially offset by a slight decline in our service has been one of the core drivers in our business following our -- achieving the record high Robotaxi revenue for the financial year of 2024. We continue with the momentum in the first quarter of this year, with Robotaxi revenue of RMB16.1 contribution in group revenue reaches 22.3%, rising from 11.9% of the same period of 2024. Product revenue delivers strong growth, increasing by 46.7% to RMB9.5 million for the first quarter. This encouraging growth was primarily driven by a substantial increase in the sales of RoboTaxi and Robosweepers, which were introduced into a new international market with expanded RMB62.9 million, primarily due to a reduction of RMB33.5 million in revenue from ADAS research and development services as the customized R&D project for a certain client has been completed in decline was partially offset by an increase of RMB29.8 million in revenue from intelligent data services and an increase of RMB1.9 million in revenue from operational and technical support services as technical support engagement increases quarter along with the transition into the operation phase of certain recorded a group level growth margin of 35.0%, representing a gross margin for a product of 49.9% and a gross margin for service of 32.8%, respectively. This reflects a sustaining improvement of our business structure in line with our Robotaxi business expansion and globalized are building a sustainable business model by engaging trusted partners and localize deployment. It helps us sustain a healthy gross profit turning into our operating expenses, we recorded a rise of 14.2% for the first quarter, amounting to RMB463.5 million. The increase was driven by a 48.4% rise in personnel-related expense compared to the same period of remain highly cost cautious and disciplined. The increase of operating expense is mainly driven by our incremental R&D efforts. In this important phase of development, we prioritize strategic investment in talent acquisition and retention to drive our technological advancements. Combining with our expansion of selling and marketing activities, we aim to solidify our leading position by laying a sustainable further break down, R&D expense represents 70.3% of operating expenses. This [line] item increased by 17.3% to RMB325.7 million compared to the same period of 2024, excluding share-based compensation, R&D expenses increased by 54% to RMB278 expense increased by 5.2% to RMB123.9 million compared to the same period of 2024, excluding SBC, administrative expense increased by 105.8% to RMB73.9 million. Selling expense increased by 32.4% to RMB13.9 million compared to the same period of 2024, excluding [SBC]. Selling expenses were up 66.7% in the first net loss decreased by 17.7% to RMB385.1 million in the first quarter of 2025. On a non-IFRS basis, the net loss increased by 108.2% to RMB294.6 million, which was mainly contributed to our continuous investment in R& of March 31, 2025, we held a total capital reserve of RMB6.2 billion, including RMB4.4 billion in cash equivalent, and time million in restricted cash and RMB1.7 billion in financial assets, mattered at fair value through profit and loss. We believe that our strong cash capital position will continue to support our ongoing R&D initiative and facilitate the expansion of our growing global a separate note, our board has recently authorized a share repurchase program under which the company may repurchase up to $100 million of its class A ordinary shares over the next 12 months. It indicates a vote of confidence in our business fundamentals, growth trajectory, and long-term conclusion, we feel encouraged by our financial performance of the first quarter. As we continue to scale our operation with additional deployment underway in international markets, we are confident to build on the success and turn global opportunity into long-term value for our stakeholders. With that operator, we are not ready to take on questions. Operator (Operator Instructions)Tim Hsiao, Morgan Stanley. Tim Hsiao Hi, thanks for taking my question. This is Tim from Morgan Stanley. I have two questions, and both are related to collaboration with the first question, we noticed that Tony briefly touched on the collaboration with Uber at the beginning of the call. I just want to quickly follow up on why WeRide and Uber decided to expand this partnership. It'd be great if you can share more callers on the deal with us. That's my first question. Thank you. Tony Han Okay, I will take this question. Thank you, Tim, for this question. So first of all, I think our expanded partnership with Uber builds on a proven model. This model is demonstrated by our successful integration of WeRide Robotaxi into Uber's in Abu this collaboration, WeRide delivers our tried and tested autonomous driving product. With Uber manages -- Uber will manage fleet operations and the customer success via its we also announced a joint global taxi launch in Dubai, where we are currently finalizing mapping and expect to begin operations I want to talk about this strong collaboration. So we have committed to deploying services across 15 major global cities within the next five years. This is a significant milestone for scalable autonomous mobility. And I think this partnership combines WeRide's world-class, autonomous driving technology and the international expertise with Uber's unparalleled marketplace reach and the operational also, I want to reemphasize as a testament of this alignment. Uber is already our shareholder, and we will invest an additional $100 million in WeRide over the next six months. To my best knowledge, this ranks among Uber's largest investment in non-affiliated autonomous driving beyond the technology, I think mission is very important. Our shared mission is to make autonomous mobility affordable and accessible worldwide. WeRide operates in over 30 cities across 10 countries with our research, R&D testing commercial into new markets, we are not just solving the mobility challenges. We want to invest in local ecosystem by creating jobs in management, maintenance, and customer support. So we have a community-oriented approach to ensure sustainable growth and I think we share this kind of mission with also believe that by leveraging both companies' leadership in our respective fields, we can accelerate the global adoption of autonomy of autonomous mobility service. So I think in terms of [not] to some technology and mission and approach and the shared value, I think Uber and WeRide are well-aligned. We are very excited for the next five years and 15 cities, globally. Tim Hsiao Great. Thank you very much for sharing all the details, Tony. And just another quick follow-up on the collaboration. So according to the announcement, also what you just shared, out of the 15 cities and probably others, the potential global market, which regions or market would be the main focus to rewrite for the Robotaxi right out?And then, in the following quarters, any signposts or milestones, the investors should monitor? Yeah, that's my second question. Thank you. Tony Han So about the regions of focus currently, we are focusing on markets mainly in Europe and the Mid East. So we are going to take a phased approach. So basically, we are not going to roll out like a Robotech service in one night in 15 cities, we want to add cities one by one. So new cities will come online each year, maybe probably three new cities every year. It's just a rough estimate. And we will be following a pattern of regulatory approval and then testing and then commercial operation and then scale deployment. So there are four for this fourth stage has been approved in our current deployment in Abu Dhabi, and I think soon it will also be improved in Dubai. And cities will be chosen based on favorable policies, guidelines, and the initiatives for autonomous also we are -- we want to, we are looking forward to really maximize social value and also want to create value for our long-term stakeholders. Operator Li Ping Zhao, CICC. Li Ping Zhao Good evening, Tony and Jennifer. Congrats for the strong Robotaxi revenue in this quarter. I got two questions could you, share with us your Robotaxi economics? How should we consider the cost structure as you scale?And second, could you please share more about your recent rollout at Guangzhou City Center? When should we expect you to start to provide a Robotaxi service in the whole city? Thank you. Jennifer Li Okay, I'll take the first question, Tony. We'll take a second. And so the first question on the Robotaxomics, let's just take a look at the the conventional rackuline, driver takes home roughly like 60% of each fare that's like 6 out of every 10. RoboTaxis revolutionized its model by reducing the driver cost to nearly nothing. Yes, we do have the vehicle cost for RoboTaxi, which is slightly higher than traditional taxi, but eliminating the 60% cost changes everything about the business cost optimization has been one of our key focuses, and we are making cautious, continuous let's talk about the vehicle cost. Leveraging on the booming and like more mature EV supply chain here in China, we have access to components of high quality and competitive we have also build in-depth collaboration with global OEM such as Reno and Nissan, and thirdly, we got a mobilized design of our sensors which enable -- enabling 90% shared component across different like autonomous driving products. We also converted to the more -- to the most cost effective semi-solid leather a few years leveraging on all of those, our autonomous vehicles are quite cost competitive. For instance, the cost of our sensor suite has reduced by more than 70% over the past five years. And going forward with the more integrated design and increasing adoption of redundant drive-by wire services, we anticipate another 20% to 30% headroom for a future, cost reduction for the next gen of today, we operate one of the world's largest AV fleet globally, over 1,200 vehicles, and with more than 500 dedicated robotaxis. All of our vehicles using the standardized tech as well as the similar sensors, same computing gives us -- this will give us tremendous buying power and make the maintenance so much simpler in the long run. Our OEM partnerships will help -- helps us keeping optimizing every part of the supply in short, compared to the traditional taxi and road [dealing] services, RoboTaxi is expected to be 50% or more cost effective in developed markets. We're doing testing and operation of AV in 10 countries seeing that on the ground, confirms a very critical pinpoint, many markets are facing very severe driver shortage, also this growing challenge in hiring and retention of the drivers. This is exactly where our solution and by working hand in hand with our local partners, we're not just deploying technology. We're solving real transportation prices caused by the labor shortage, all for this first question, Li Ping [weighs]. Tony, I'll leave you to the second question on the Guangzhou plan. Tony Han Yeah, I believe the second question is about like we want to discuss a little bit about our recent rollout at Guangzhou City also, you know, want some details about our local taxi service. So first of all, I want to say, last week, we launched China's first 24/7 autonomous ride-hailing network, covering the core areas of Guangzhou. As I mentioned, Guangzhou is a number 3 city in then our expanded Robotech service features actually 8 pilot operation routes in the city center, connecting landmarks and transport hubs such as the airport, Guangzhou South Railway Station, Canton Tower, and the Canton Fair you are familiar with Guangzhou, they are all the most -- busiest and also the most important place and the hubs and you probably if you come to Guanghou, you will visit these places. And when we first kick off commercial taxi service back in the year of 2019, we started in Guangzhou, this is a mega city with traffic, very busy traffic and the population is at least 20 date, we have been providing autonomous mobility service to the local citizens for more than 200 days, so I'm quite confident and quite proud for this achievement. The expansion of this service is very important milestone in the the first time, Robotaxis is allowed in the central area of such a big city. That's not easy, actually. It incorporates some of the most complicated scenarios we have ever seen, including really various road types and traffic conditions as well as very subtle interactions with a wide range of road users like passenger cars, engineering cars, pedestrians, cyclists, the three wheelers. You have to handle all of these it is a big challenge to our technology, but I think we solve all these issues quite well. And also being allowed to operate in central Guangzhou underscores our confidence in safety records and robust we will strive to maintain a high standard of service and we will also be very careful. We will expand progressively and responsibly in accordance with the requirement of local authorities. So I think that's all I want to say about this question. Operator Joel Ying, Nomura. Joel Ying Thank you for taking my question. This is Joe from Nomura, and I have two questions. For the first one, what's the implication of the recent launch of driver testing in Abu Dhabi? Is there any operation plan as the next step?And my second question is since we see some aggressive OEMs, also plan to enter into a Robotaxi business. So what's our company's view on it? Are they comparative, compared to level 4 players given their, they have more driving data and what is our edge on this? Thank you. Jennifer Li And then I'll take the first question. We're very excited about the driverless test in Abu Dhabi. To my knowledge, this is the first of its kind in the Middle East, and it's also the first time that Robotaxi without safety driver on public road is allowed outside China and the is a veteran in the Middle East. We started Robotaxi trial in UAE as early as 2021. The desert climate of the country, including high temperature and the sunny environment, created all the special challenges to the autonomous vehicles. Nevertheless, our Robotaxi delivered a high level of reliability and safety during the initial two-year public on this confidence, so WeRide secured the first national autonomous driving permit in UAE in 2023, which also remains the only national permit in the world as of today. Last year, our local operation entered into a new chapter. I'm sorry. (inaudible) Tony Han Have some water and then, we have plenty of time. Jennifer Li Yeah, speaking of our our join forces with Uber, it also allows us to provide local citizens with better services and accessibilities. So the driverless testing marks a major milestone as we begin driverless testing. This is a significant leap forward in the journey, in our journey in the Middle are also particularly excited to have received approval to expand our service area to include Abu Dhabi's Al Maryah Island and our community. So both islands, they'll be most like dynamic urban center in Abu Dhabi. We're very excited to bring the cutting-edge transportation solution to those now, Tony, I'll leave you to to the next question. Thank you. Tony Han Okay, yeah. You can take this time to really clear the throat. Okay. I'll answer the question. So, I think -- thank you, this question is really deep, and I really appreciate this question is about like our competition about against major car [audience] for Robotaxi service and my view and our edge. So first of all, I want to say the competition is ubiquitous. If you are [wild], if you are afraid of competition, you are not eligible to be a leading company. We already is the first mover and a leading company, autonomous we welcome competition and as long as the winner can bring the best quality of service, most reliable robotaxi service to ordinary people, the citizen, I think that will be great enough. But we are confident with WeRide because, first of all, I think our proven record has already shown, the superiority of our technology and also the reliability of our we -- over the past seven years, we have been closely working with some major car OEMs. The major car EMs help us to build the reliable vehicle platforms for global taxi service. And I want to say OEM actually plays a very important part in the whole ecosystem. We did learn a lot from all this said, I want to emphasize the difference between the ADAS system and the global tax system. Okay. ADAS system stands for advanced driver assistance system. So the major component who are responsible for driving a car is the person. L4 level Robotaxi is for autonomous driving vehicle. There are two different things, two different using ADAS for Robotaxi, it's just like mistakenly using an L2 system for L3 system will lead to very tragic accidents. I think some accidents we have already I want to emphasize, if you really want to do Robotaxi to L4, you really need to spend lots of time, lots of energy in simulation platform in Robotaxi fleet, sharper technology and test for millions of miles, only have a big user base is not Lots of time, a big user base only tells you that your car is very good, can produce a very good L2 system, but there's nothing to do. You have -- you can do an L4 system. So basically, a warrior, a great warrior on the land, maybe not so good warrior in the seafare, the sea warfare. So they are totally today, we ride real-world Robotaxi operation in multiple locations is actually supported by continuous investment in building and improving our platform. And it has, it's -- the safety has been proved over -- we want to pro -- very proudly announced like over the past seven years, we have a very good record that we haven't experienced any autonomous driving system failure. I think that's a very remarkable currently, we write is one of very few companies that have brought level 4 mobility to the public and we are really confident to maintain a leading position in this industry. Okay. Thank you for this question. That's all I want to say about this question. Operator Yawen Tan, BMP Paribas. Yawen Tan Hi, this is Yawen from BMP. Thanks for Tony and Jennifer's time. And thanks for the opportunities to discuss the exciting industry here. And I have two first one is there any specific plan for further expansion of the full size and operation area? And secondly, what's your view on regulations in different markets? Have we seen there are countries that is accelerating the adoption of L4 technology? Thank you. Jennifer Li Thank you. I will take the first question for the plan for future expansion. So as Robotaxi is penetrating, traditional mobility in different regions will remain a balanced strategy, between China market and international in China, we will gradually increase the deployment in selected tier-one cities. Our service was throughout step by step and which is in accordance to this adoption was map by the local authority. We have a track record of more than five years public operation in China and our recent development that entered into the city center in both Beijing and Guangzhou, it's a natural progress built on the existing we'll keep the momentum, keep on the momentum, already on the momentum. And in overseas market, we'll be scouting through strong global partnerships, so by working together with mobility and transportation stakeholders worldwide, will be able to localize and accelerate our deployment in the market, more in the international market more, example, some of our global partners including like say UAE, we have the integrated transportation center in Abu Dhabi and the road and the transportation authority in Dubai that are extremely in France, we have -- we have Renault, Beti, and Macif as our partner. And in Switzerland, we have the SPB which is the Swiss National Railway and we have the Canton of Zurich and Swiss Transit Lab, that are also, we are working on multiple projects in Switzerland as in Singapore, we have Chye Thiam Maintenance in Singapore. And we also have in Germany, we have Bosch as a key partner. So, last but not least, Uber is a key partner with our plan rolling out commercial Robotaxi service in 15 new cities, like say, if we're talking about the size, the expansion plan, so all those cities we're planning to enter typically have -- already have an existing red healing and taxi ecosystem that ranges from a few thousands to tens of thousands of shared mobility this is an ideal environment for L4 technology to integrate and to scale up. So as part of this partnership, we [rush] Robotaxi service will be available through Uber's app, and Uber will be responsible for the big as you can see, our global partner strategy is based on our shared execution, risk management, and local market insight. We're not entering into the new market alone, so alone, we're building a network of trusted global collaborators to accelerate adoption, to shorten the deployment cycle, and to meet the regulators expectation of each region I'll leave you to the next question on the regulation in different markets. Tony Han Okay, so I'll talk about like the regulations of different markets. And actually, there are markets that are favorable to autonomous driving vehicles. And so currently, I want to name a few like several countries in Mid East like UAE and Saudi and also several countries in Europe and of course, is very welcome and it's also very -- China is actually fostering auto driving vehicle. And so they are the major markets we want to deploy. So actually, there are also for the cities actually, for the countries like, if they really want to welcome or embrace the autonomous driving vehicle, that's because of, there are several factors they can one is the safety, number two is the cost of labors. So we -- you need to take all of these factors into account. And also, for in this region, for the countries that's favorable autonomous driving or need autonomous driving, or need global taxi service, I think that represents huge opportunities for first movers like we experience like this kind of increasing interest in every technology and actually, this kind of increasing interest can be demonstrated by our expansion and our operation.I just want to name a few actually, in January and May, we roll out our Robotaxi and Robobus service in Guangzhou City Center successfully. And that's what I have already mentioned. And in February, we actually received approval to launch our GXR for fully online paid red handing service in Beijing, just only four months after we officially announced the new purposely built Robotaxi in March, we obtained level 4 operation permit in France. In April, we parted with Dubai, Dubai's Road and Transportation Authority and Uber to integrate our local taxi fleet into Dubai's public transportation system. I'm -- I can't wait for this to come because in our dream, our mission is like to deploy local taxi all over the May, we have started for the driver is testing in Abu Dhabi. Actually, I'm currently -- in Abu Dhabi, I just tested, and I think it's now have deployed in 10 countries across Asia, Mid East, and Europe. From our experience, we understand that regulators are generally supportive towards autonomous driving, but condition on -- we can keep our track record for we are really optimistic about the future and we believe WeRide is well positioned to capture the expanding penetration for autonomous driving technology. That's my answer to this question. Thank you for this question. Operator Tian Wang Hu, China Securities. Tian Wang Hi, everyone. Can you hear me? Tony Han Yes, we can. Tian Wang Yeah, my first question is there any new product development that you could share, especially Robotaxi? Tony Han Okay. So, new products, we are actually, last October, we launched a new generation of Robotaxi GXR which is really a purpose-built Robotaxi tailored for L4 driverless. We also trimmed it for the deployment in the Mideast in like for like in today, like the temperature is like 40 degrees Celsius, or you have to have a car that is with very powerful AC and a very big actually upgrade our GXR to make it more suitable. It's a purpose to build global taxi to make it more suitable for the market of Abu Dhabi and the Dubai. And we -- to work on this, we worked closely with the GD Verizon to customize GXR. We spent tons of time and efforts on our proprietary sensors with 5.6 and our HPC are ready and integrating into GXR and it's very suitable for the extreme heat weather condition. And we also work on some redundant system. Okay. So the whole system, the GXR is full redundancy, several round of redundancies so that we have very reliable and stable braking and steering there's another thing I want to mention like for the new products and new things like that is we are going to further upgrade GXR with the computational platform. In the second half of the year, we will build our computational platform for by newest Nvidia DRIVE Thor platform as you have already probably is the next generation Thor platform, extremely powerful and it has like, has a computational power, the whole computational power in our controller is actually more than 2000 tops. So, for the past five years, we also try to reduce the cost, like the cost of our census we have reduced by more than 70%.So we want to do it through innovation and new products. And for the next generation will taxi currently under development, I think we look forward to another 20% to 30% cost reduction and further details, we will review it after the spec be there are a lot of things, new things ongoing, that's the really happenings working on Robotaxi and this AI stuff, the new things comes every day. And we believe that with a powerful and smart brain, the new GXR will not only provide a high level of safety and comfortability, it will also our new purpose-built GXR will redefine the Robotaxi business and this car is ready for large deployment.I really look forward to see the large deployment of GXR in Abu Dhabi and Dubai. Okay, that's my answer to this question. Tian Wang Thank you. And my -- and I have another question. My second question is what's your view on the growing level of competition in China as more companies are rolling out autonomous driving technology? Tony Han As I mentioned in my answers in the previous question, right, as a leading global company, you have to face all kinds of competition, either globally or inside China, either from [Haoyue] or from ADAS system company or from Robotaxi, another Robotaxi for my view over my view is like the competition is good. I love the beauty of the free market, right, so through trading through competition, the customers can get the most cost-effective and high-quality products. What's wrong with that? That's a great but based -- are you worried about losing in this competition? I think for the past eight years of record has already shown, we might growth from 10 people start up to leading autonomous driving company with more than 2000 has already proven that, when we have nothing, we only have a few people, a very small farm, we can start to grow, and now, we are in very advantagous and in a leading position. We are very I always mention like we have 4-core pillars that we write apart from the competition. The four pillars, I want to name them one by one. They are tech competence; technology is always our foundation. Second, proven business model, and we are really looking to the large-scale deployment and also deploying global one is the safety and reliability collaboration record. Please go ahead to check your record. I believe we have the best safety record all over the world. And we have the first pillar is a strong partnership I have a time, do I still have some time? I want to elaborate actually these four pillars. Thanks for this question. So first of all, technology one, over the past eight years, we build up, we write one universal platform that can be deployed to use for Robotaxi, Robobus, Robosweeper, Robovan, and ADAS the same time, you get data from all over these five branches. So basically you are five times more efficient in collecting data, collecting common cases and five times more efficient improve your idea. You are deploying a large scale, not only in Robotaxi fleet, but also in Robo -- when in Robosweeper. That's a grand vision from me right?And I think no other company has such a grand vision, and I see no other company has achieved the concrete steps for such grand for proven business, look at our operation, I think I'm quite proud and every step we have create a repeatable, scalable, and monetizable business model across multiple verticals, including mobility, logistics, and the that proves actually our autonomous solution can address a variety of real-world challenges. So, we operate in 30 cities across 10 countries. So that means like the business-model approved, not in a time frame but also pillar, safe and reliable record. I want to read you something about some record. So our L4 autonomous vehicles have undergone successfully, successful tests, and commercial deployment in diverse and extreme environments including urban village in China such as congested and unpredictable road environments in downtown in a very northern part of China, Heihe, and that is like 30 degrees below, 30 Celsius degrees below zero in winter and also, in Abu Dhabi, the high heat where I'm currently sitting in the office, 40 degrees Celsisu. We show that we can still operate one, very strong partnership, we emphasize many times our collaboration with Uber, with all different local authority in Switzerland, with France, Singapore, UAE, and we also have partners with multiple partners in Singapore, like in Resort World Sentosa and the robots operation. So I won't be able to name them this way long list and also for ADAS system, we work with the top one, tier-one supplier Bosch. So with all of this, I think, from the competition, we are confident, and I think that's also the value of WeRide. Okay, that's my answer to this question. Operator Leo You, CLSA. Leo You Hi. Good evening, management. Thank you for the opportunity. So I want to ask about the use of cash. So we're quite excited about the share repurchase program. So would you please share more about your thoughts behind rolling out the program now? And how would you strike the balance between the shareholder return and investing in technology and products. Jennifer Li I'll take this question. Thank the board has authorized a share repurchase of $100 million, which reflecting their -- reflects their strong confidence in the company's solid foundation, and the leading position in the autonomous driving industry and the compiling long-term growth the proposed restructure can be made from time to time in the form of compliant transactions. So yeah, so, we think this initiative can allow us to opportunistically to buy back shares, we miss these opportunities, which also demonstrating our commitment to deliver value to the shareholder while maintaining financial flexibility for future growth. Yeah. Leo You Okay. Thank you, Jennifer. And I have another question on the financial part, so can you share more about the growth drivers behind the product revenue and service revenue in the first quarter and how do you see the trend of the revenue line? Jennifer Li Yeah, so, at this stage, so our growth momentum for the first quarter, it's primarily attributed to the growth of the Robotaxi business and our global at this stage, given, all the revenue for different product line is still relatively small, so we think we'll just like focusing on the product itself, instead of like breaking down for -- because the product and service makes changes every quarter as sometimes when we deliver like a mega project for one quarter, so the product revenue can significantly increase and on a different quarter while the service revenue can be the dominant factor for the then, let's -- if they're talking about the Robotaxi service at Robotaxi as a business. So this is our core business from day one and so the revenue contribution for Robotaxi witnessed a significant increase of 10.4% year on year, which marking up like 22% of the total revenue of this quarter. This is based on our knowledge and it's also like largest, like published, like announced the Robotaxi revenue among the and the margin level, we're still at a very healthy like level of around like gross margin of around 35%. So yeah. Operator Thank you. If there are no further questions, I'd like to hand the conference back to our management for closing remarks. Tony Han Okay. So, everyone, thank you again for your participation. I would also like to take this opportunity to thank our partners and our employees. I have to say none of the progress is possible without their support and hard we look forward to speaking with everyone again in our next call. Thank you. Goodbye. Operator Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.
Yahoo
22-05-2025
- Business
- Yahoo
Q1 2025 Xpeng Inc Earnings Call
Alex Xie; Head of Investor Relations & Capital Markets; Xpeng Inc Xiaopeng He; Chairman of the Board, Chief Executive Officer, Co-Founder, Executive Director; Xpeng Inc James Wu; Vice President-Finance; Xpeng Inc Brian Gu; Vice President of Corporate Finance and VW Projects; Xpeng Inc Charles Zhang; Vice President of Finance and Accounting; Xpeng Inc Tim Hsiao; Analyst; Morgan Stanley Ming Hsun Lee; Analyst; Bank of America Ping Le Wu; Analyst; Citic Securities Bin Wang; Analyst; Deutsche Bank Johnson Wan; Analyst; Jefferies Lou Jia; Analyst; BOCI Nick Lai; Analyst; JPMorgan Operator Hello, ladies and gentlemen. Thank you for standing by for the first-quarter 2025 earnings conference call for XPeng Inc. (Operator instructions) Today's conference call is being recorded.I will now turn the call over to your host, Mr. Alex Xie, Head of Investor Relations and Capital Markets of the company. Please go ahead, Alex. Alex Xie Thank you. Hello, everyone, and welcome to XPeng's first-quarter 2025 earnings conference call. Our financial and operating results were issued by Newswire Services earlier today and available online. You can also view the earnings press release by visiting the IR section of our website at on today's call from our management will include a Co-Founder, Chairman and CEO, Mr. He Xiaopeng; Vice Chairman and President, Dr. Brian Gu; Vice President of Corporate Finance and VW Projects, Mr. Charles Zhang; Vice President of Finance and Accounting, Mr. James Wu; and will begin with prepared remarks, and the call will conclude with a Q&A session. A webcast replay of this conference call will be available on our website IR. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and such, the company's results may be materially different from views expressed today. Further information regarding these and other risks and uncertainties is included in the relevant public filings of the company as filed with the US Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required under applicable also note that XPeng's earnings press release and this conference call will include the disclosure of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures. XPeng's earnings press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited GAAP measures.I will now turn the call over to our Co-Founder, Chairman and CEO, Mr. He Xiaopeng. Go ahead. Xiaopeng He (interpreted) Hello, everyone. The first quarter of 2025 marked a promising start for XPeng as the company successfully navigated the traditional off-season in the automotive market. Our Q1 deliveries totaled 94,008 units, marking a 331% year-over-year increase and establishing a new historical record for quarterly deliveries. We secured the top position itself among emerging EV brands domestically and this quarter, our vehicle gross margin has improved for seven consecutive quarters, propelling the company's overall gross margin to a record high of 15.6% in Q1 2025, with net loss narrowing significantly compared to the previous quarter. Free cash flow exceeded RMB3 billion in Q1.(interpreted) Many are curious about our impressive performance in Q1. I believe it stems from XPeng's systemic enhancement across our abilities in organization, product development, marketing, technology and operations, along with a consistent commitment to AI-driven tech innovation and steady and long-term sustainable growth. The MONA M03 introduced eight months ago has surpassed 100,000 deliveries, securing its place as the best-selling A-class pure electric P7+ achieved its 50,000 unit production, just five months after its launch, and the 2025 G6 and G9 models delivered over 7,500 units in total in their April debut. Our monthly deliveries have exceeded 30,000 units for six consecutive months.(interpreted) I'm most excited by the fact that our growth potential is just starting to emerge, where spearheading integrated innovations powered by AI in various fields, including AI assisted driving, smart cabins, Turing chips, embodied intelligent robots and enterprise productivity tools. In Q2, we achieved significant progress in several areas, reinforcing our conviction that XPeng's comprehensive transformation toward AI has begun to achieve initial success across the full technology of our key AI capabilities are poised to create generational leadership within the industry in 2026. I'm confident that through the extensive application of our physical world foundation model and turing chips and vehicles, the global deployment of AI-powered vehicles and related policies along with the innovative advancement of humanoid robots XPeng will lead three growth curves and attain sustainable long-term high growth.(interpreted) XPeng has actively embraced a strategy of the monetizing technology aimed at reducing various to advanced technology through innovative R&D and crafting products that resonate with users. These efforts makes premium technology accessible to May 28, we will launch the MONA M03 Max. The full performance position will debut during AI assisted driving in the RMB150,000 price sector for the first time. This innovation enables tech-savvy young consumers to experience top-tier intelligent features once exclusive to luxury vehicles without compromise, ensuring safe and smooth AI assisted launch represents a pivotal moment for AI democratization, we deem the automotive sector, shaking up the current landscape where smart urban driving and highway driving is limited to high-end models at premium price points and showcasing Chinese automakers groundbreaking innovations in physical world AI.(interpreted) In June, the G7 will make its debut to the public, and I'm confident that it will stand out as a highly competitive new product in the RMB 250,000 class SUV market. In Q3, we'll launch the new generation P7, a luxury sports coupe in the 300,000 R&D segment. In Q4, our Kunpeng super electric models will gradually begin mass production, realizing the one vehicle dual energy options approach. The Kunpeng Series aims to expand our reach to a wider consumer base, both domestically and internationally, unlocking substantial sales growth potential.(interpreted) XPeng's global expansion represents our second growth curve. We anticipate that our overseas business will experience rapid growth over the next three years, becoming a significant contributor to our sales and profit increase. In Q1 2025, overseas deliveries sorted by more than 31,700 year-over-year, solidifying our status as China's leading exporter of mid- to high-end new energy vehicles. During Q1, we opened over 40 new stores abroad, entering key markets such as the UK and Europe and Indonesia in Southeast Asia. As a global technology company, we strive to enhance localized R&D, manufacturing and services globally, establishing a unique mid- to high-end brands rooted in technological innovation.(interpreted)Let me now give you an update on XPeng's AI development. 2025 signifies the launch of XPeng's full-scale implementation of the physical world foundation model in AI-powered vehicles, further extending our generational advantage. We have developed the most comprehensive and sophisticated full stack in-house R&D system with the highest potential in the industry, which includes the Hawkeye Pure Vision ADAS solution, self-developed high-performance Turing chips, ultra large-scale cloud-based foundation model, fully localized VI models, vehicle EEA architecture and physical simulation strengthens our strategy for advanced autonomous driving, establishing formidable competitive barriers. Moving forward, we'll expedite R&D efforts from L2+ assisted driving to L3 and L4 autonomous driving technologies, widening our generational lead.(interpreted) Experience is the pioneer in China's automotive sector for implementing urban smart driving without depending on LIDAR. Our Hawkeye Pure Vision ADAS solution, although difficult to develop, greatly enhances the upper limit of safety and user experience. We improved the capacity parameters and inference frequency of our visual perception models, significantly reducing end-to-end latency for quicker and safer assisted enhanced 360-degree environmental perception performs exceptionally well in intricate urban environment, including turns, u-turns and under adverse weather conditions, such as rain, snow or fog, enhancing both safety and driving experience. Furthermore, XPeng Hawkeye Pure Vision ADAS solution is ideally position for the global rollout of high-end autonomous driving and the shift from AI cars to advanced intelligent robots.(interpreted) In my view, the crown of physical world AI lies in chips, models, data and infrastructure with chips as a dual. XPeng has been committed to in-house chip development since 2021. In 2024, our self-developed chips succeeded in its first Turing chip delivers 3 times to 7 times the effective compute power of mainstream automotive chips through full sec in-house development and closed-loop integration of hardware, software, compilers and model architecture. We maximize synergy between chips and AI models. Our dedication to chip R&D will not only deliver industry-leading in-vehicle computing power and models, but also elevate the efficiency and overall experience of XPeng's AI models.(interpreted) In the ecosystem of the physical world AI model, the benefits of the scale in law are becoming clear. XPeng is working on larger-scale cloud-based foundation models and edge fi models. Our physical well foundation model is the cloud that in the cloud has achieved 72 billion parameters to facilitate its training. We established the first 10,000 GPU-AI computing cluster in the Chinese automotive industry, maintaining an operational efficiency of over 90% throughout the the end of the year, our high-quality training data will expand to 200 million via that depicts various driving scenarios across the country. Powered by large computing resources and extensive data, our foundation model can understand the real world and execute complex reasoning similar to human will evolve through reinforcement learning to outperform seasoned human drivers, laying the groundwork for L3, L4 autonomy and autonomous driving and eventually acting as a universal model for all expanse physical AI terminals. We create edge models via knowledge distillation and pruning to align with in-vehicle computing power, leveraging the foundation models capabilities as much as possible to enable industry-leading inference on devices.(interpreted) To truly outperform traditional vehicles, AI power cars must possess true intelligence, integrated three core capabilities of the brain, cerebrum and the spinal cord. For XPeng's smart we are currently developing a multi-model large model that entirely functions locally on Turing chips. This advancement facilitates smarter voice interactions and a more personalized user experience and ensures smooth operation even in office conditions, significantly enhancing safety and global scalability. This will be China's first large model capable of fully localized multilingual interaction and VRA features in a cockpit, paving the way for rapid improvement in the vehicles intelligence.(interpreted) Our investments in AI vehicles also provide distinct advantages in humanoid robot R&D in China's robotics industry. The -- our fourth-generation robot, celebrated at the Shanghai Auto Show will soon be followed by a fifth generation model powered by Turing chips significantly enhancing on-device computing robot models will surpass traditional industry approaches such as small reinforcement learning models and from systems utilizing the BLA architecture of our physical foundation model and taking advantage of our existing cloud AI infrastructure to improve robotic intelligence as a type of embodied intelligence, humanoid robots will represent XPeng's third growth curve. We aim to launch industry-leading humanoid robots for industrial and commercial applications in 2026 and evolve rapidly through data from mass production scenarios.(interpreted) I'm optimistic that the robust growth momentum will carry on in 2025. In the second quarter, we'll finalize annual upgrades or consideration improvements for five models with second major models set to begin deliveries in the third quarter. For the second quarter, we estimate total vehicle deliveries to range from 102,000 to 108,000 units, reflecting a year-over-year increase of 237.7% to 257.5%.Revenue is expected to be between RMB17.5 billion to RMB18.7 billion, representing a year-over-year growth of 115.7% to 130.5%. I believe will not only meet our goal of more than doubling sales growth this year, but we'll also achieve profitability in Q4 and generate substantial free cash flow for the entire enhanced self-sustaining capabilities will drive ongoing breakthroughs in AI technology and product development.(interpreted)Thank you, everyone. With that, I will now turn the call over to our VP of Finance, Mr. James, who will discuss our financial performance for the first quarter of 2025. James Wu Thank you Xiaopeng, Now let me provide a brief overview of our financial results for the first quarter of 2025. I'll reference RMB only in my discussion today, unless otherwise stated. Our total revenues were RMB15.81 billion for the first quarter of 2025, an increase of 141.5% year-over-year and a decrease of 1.8% from vehicle sales were RMB14.37 billion for the first quarter of 2025, an increase of 159.2% year-over-year and a decrease of 2.1% quarter-over-quarter. The year-over-year increase was mainly attributable to higher from services and others were RMB1.44 billion for the first quarter of 2025, representing an increase of 43.6% year-over-year and an increase of 0.5% quarter-over-quarter. The year-over-year increase was mainly attributable to the increased revenues from technical R&D services related to the Volkswagen Group, repair and maintenance services and auto financing margin was 15.6% for the first quarter of 2025 compared with 12.9% for the same period of 2024 and 14.4% for the fourth quarter of 2024. Vehicle margin was 10.5% for the first quarter of 2025 compared with 5.5% for the same period of 2024 and 10% for the first quarter of 2024. The year-over-year and quarter-over-quarter increases were primarily attributable to the ongoing cost reduction and economies of scale driven by the increase in sales volume, partially offset by the inventory provision and losses on purchase commitment related to the upgrade of certain vehicle models.R&D expenses were RMB1.98 billion for the first quarter of 2025, representing an increase of 46.7% year-over-year and a decrease of 1.3% quarter-over-quarter. The year-over-year increase was mainly due to higher expenses related to the development of new vehicle models and technologies as the company expanded its product portfolio to support future expenses were RMB1.95 billion for the first quarter of 2025, representing an increase of 40.2% year-over-year and a decrease of 14.5% quarter-over-quarter. The year-over-year increase was primarily attributable to the higher commissions paid to the franchise stores, driven by higher sales volume. The quarter-over-quarter decrease was mainly due to lower marketing and advertising a result of the foregoing, loss from operations was RMB1.04 billion for the first quarter of 2025 compared with RMB1.65 billion year-over-year and RMB1.56 billion quarter-over-quarter. Net loss was RMB0.66 billion for the first quarter of 2025 compared with RMB1.37 billion year-over-year and RMB1.33 billion of March 31, 2025, our company had cash and cash equivalents, restricted cash, short-term investments and time deposits in total of RMB45.28 billion. To be mindful of the length of our earnings call, I would encourage listeners to refer to our earnings press release for more details on our first quarter 2025 financial concludes our prepared remarks. We'll now open the call to questions. Operator, please go ahead. Operator (Operator instructions)Tim Hsiao, Morgan Stanley. Tim Hsiao (interpreted) So my first question is about the volume sales because expense has successfully kept monthly run rate about 30,000 units for six months in a row, outperforming EV startup here during the low season. Given the strong model pipeline that the CEO just mentioned, should we expect more significant sales jump in the following quarters? So just wanted to get more clarity on the upside? That's my first question. Thank you. Xiaopeng He (interpreted) Thank you so much for your question. First of all, I think it is -- -- our performance in the past quarter definitely aligns with our overall strategy of long-term and steady development. And we are doing everything we can to make nations very comprehensively for our future long-term Q2, we expect to actually have five upgraded versions or improvement face look versions, which may cause some changes in the market in the midterm or short term, but it will be very beneficial for the long-term development of the country -- but for the company. But I would like to actually highlight three of all, starting from Q3, you're going to see our momentum of launching your models even more aggressively going into 2026 and it's going to generate more deliveries. The second aspect is our AI capability and our R&D efforts being translated into AI performance on our cars and also our robots, which will allow us to maintain a leader in the industry and really widening our generational difference between ourselves and our competitors. The last aspect, something that I want everyone to pay attention to is our Kunpeng electric drive system, which also will go into -- is going to power our future lineup. Thank you. Brian Gu Yes, Tim, it's Brian. Let me just add to what mentioned. First of all, the steady performance we saw in the previous many months actually also reflects improved operation quality. For example, the first quarter usually are the low season for Chinese auto sales and we maintain still steady growth. And also the second quarter, despite many transitions we need to handle for our refreshments of products, we still see a very stable and steady delivery those actually, I would say, representative of the operation quality that we have. Looking forward, we actually have very strong confidence that with now the many new launches, for example, the MONA Max by the end of this also the next couple of months with G6 -- G7 and P7 launches, all of them, we think, will be catalysts for further growth. So we believe that in the third quarter, we'll see continued growth in our delivery numbers and hitting historical highs another thing I think I want to also highlight is that also, you can look at the new models that we're introducing, those will represent products in higher-priced categories as well as with better profit -- gross profit margins. So this also introduced a very, I would say, favorable mix towards our overall product I'll have James comment on the. Operator Ming Lee, Bank of America. Ming Hsun Lee (interpreted)So for your export business, could you give us the latest guidance for your growth in 2025? And among all the different regions, which area do you see a higher growth? And for the EU zone because they increased the tariff for the EV made in China since last year. So right now, what is your current strategy in this market? Thank you. Brian Gu Hey, Ming, it's Brian. Let me address your question. Yes, indeed, we have seen a very strong international growth and also contribution to our results, both on the top line as well as on the bottom line. It is actually an area we actually are increasing our efforts with investments as well as our team focuses. I would say that this year, our continued focus will be on the European, Middle East and Southeast Asia, those three core regions. And also some of the regions we also have launched recently, for example, the UK, Indonesia as well as, I think, continued growth we are seeing across a number of the markets that we entered later last I would say these actually are showing pretty balanced overall growth, all reaching triple-digit growth, I would say, in the last quarter year-over-year. Going forward, I think we are continue going to expand to additional looking at also some of the other regions that we currently doesn't have a focus yet, for example, Latin America as well as some other countries in the Asian region. The the issue on the tariff, I think, is something that we are very, very focused on. Clearly, it's having an impact on the profitability of our business, for example, in I think we are committed to build for the longer term. We are also looking at ways to reduce the impact of these tariffs through more collaboration with our partners, a change in product mix on the ground as well as potentially local investments that give us ability to navigate some of these tariff hits. So these are things that we are focusing at the moment. And I think if there's any further progress, we'll be definitely sharing with you as well as the community. Ming Hsun Lee (interpreted) So my second question is related to your Turing chip. So is well (inaudible) be the first model to use the Turing ship in your product portfolio. And then going forward, will all of your XPeng's branded EV models use Turing chips? And by using these chips, I believe you can reduce your cost, will you share the cost reduction benefit with your customers? Yes. So that's my question. Thank you. Xiaopeng He (interpreted) Thank you. This is Xiaopeng. Thank you for the question. Now when it comes to our Turing chip, the development of it has been going really, really well. Not only when it comes to the application of our cars, but also in upgrading our autonomous driving capability, in our cockpit and across a lot of our models. Currently, everything is going really have already -- we have already begun our production in second quarter this year, and we expect to must produce some more models supported or with the Turing chip in the third quarter of the year. Now when it comes to the mass production in a wider scale, we believe that it's going to happen very, very soon because with the development of our chip, we not only will be able to have a stronger and more competitive autonomous driving capability, but also stronger capabilities to support our other it comes to the Turing chip itself, AI computing power right now, the effect of computing power is we are leading the industry because it's about 3 times to 7 times the chip computing power in mainstream edge AI chips, which is very, very competitive, and it's a huge step-up of the game. So when it comes to the Turing chip and how it helps us to go into the next level or next stage of the AI world, especially the physical AI world, we are going to leverage our physical world foundation model also our ex AI or in-vehicle AI model, which will be very, very capable and powerful to allow us to go into higher level or more advanced level of autonomous believe that in a very, very near future, we will be able to really showcase our generational lead in this regard. By that time, we're not going to talking about the human interference within the current, how many miles we're going to enter the next stage of autonomous driving. And that's when I believe we can really generate benefits and optimize our user experience for our consumers because by that time, we not only will launch our new models with higher and advanced autonomous driving capability, but also leveraging our smart cockpits and also localize our VLA capability, XPeng cars will definitely bring to you a completely new experience because our target of the company has always been democratizing high-end technology, we will bring benefits to all of the people and hope that everyone can get access to this fancy technology one day and as soon as possible and we believe that this new Turing chip can help us to do that. Thank you. Ming Hsun Lee Thank you. That's all my question. Operator Ping Le Wu, Citic Securities. Ping Le Wu (interpreted) Thank you for taking my question. And my first question is about MONA. MONA, I'm looking forward to the release of MONA next? And what is the rule of the MONA Series AI strategy? And what percentage share of MONA next is our target? Thank you. Xiaopeng He (interpreted) Thank you for the question. Now this is definitely a question that we're going to explore. We are also curious about that as well because when you look at the current market, when it comes to the market segment of RMB150,000, there no real implementation of end-to-end large models or the computing power of 500 tops and above. So these available cars are not the so-called full performance models. So we are very excited about MONA, and we are very curious about its penetration rate in the market.I definitely have very high for it because of our capability. And when you look at the -- look across the industry, even for cars between 150,000 to 200,000 currently, there's very, very rare so-called full performance version available in the what is the penetration rate going to be, 50%, 70%, we don't know. And -- but we are curious, and we'll try our best to achieve the maximum amount. Thank you.(interpreted) And also regarding the part of your question that is about our M03 and the MONA series, obviously, M03 was our first model of the whole MONA series. And in 2026, we can expect to see more models from this MONA as a series, it really caters for young people's taste, it looks cool and beautiful, provide this emotional value and connection with younger consumers. So we definitely can cater to that. We believe that after next year, you will be able to see full potential of this series, and it's going to be very impactful across the industry. Thank you. Ping Le Wu (interpreted) And my second question is about the research and development investment. And for 2025, to what percent to the of the R&D expense will be allocated to AI-related areas? Or to what or how much to the increase of the R&D expense will be allocated to AI-related areas? Thank you. James Wu Thank you. This is James. So I'll answer your question regarding the overall R&D expenses for this year. So if you look at our total R&D expenses in 2024, it's around RMB6.5 billion. In 2025, we have guided around RMB8.5 billion of full year R&D expense, and this remains unchanged. I would say the increased R&D expenses will -- a good amount of that will be spent on AI-related activities, and that would primarily help us to improve our computational capability on a cloud basis, that will both as Xiaopeng mentioned earlier, be applied on the AI vehicle, autonomous driving training as well as humanoid robot line as there are other areas that we will continue to invest include smart cockpit equipped with local VLA features that will allow us to increase our capability on multi-language voice command, interaction function as well. And we should be able to also personalize our customer experience with more enhanced than AI, obviously, we will continue to invest on a vehicle basis. As you know, we will have additional vehicle models that we launched this year and into 2026 as well to enhance our product portfolio, and that will help us to complete our portfolio in the long term. Operator Bin Wang, Deutsche Bank. Bin Wang (interpreted) James Wu Bin, this is James. So let me clarify it. So in the first quarter, we did receive some level of, let's say, regulatory subsidies as well as tax rebates, tax handling fees, refunds, things like that. The recognition of those revenues is based on the actual receipt of the cash proceeds, which occurred in the first this is -- in the nature of, I would say, cash collections into the next couple of quarters, I'm not sure we'll continue to be benefited from this type of revenue recognitions. So that is on the other income side. You also asked a question about the FX movement in the first is primarily driven by our business in Europe. We have a pretty sizable I would say, deliveries, we actually delivered more than 10,000 units in Europe over the course of last year. And we are exposed to euro from a revenue strength in euro in the first quarter resulted in a portion of FX gain in the first quarter. But we've seen that to circle back a little bit in the recent months in April and May, but we'll continue to monitor that exposure and be able to control our exposure to euro and not to ensure that FX impact through our exposure is not a surprise going forward. Thank you. Bin Wang (interpreted) The second question is about the second quarter margin guidance. I seem that you have better product mix in the second quarter because it happened smaller proportion MONA (inaudible) can you provide guidance for the second quarter ASP and gross margin? Thank you. James Wu Sure. This is James again. From a gross margin perspective -- so first of all, I think we've observed we have achieved a seven consecutive months vehicle margin improvement. This is primarily due to our cost reduction efforts as well as achievement of certain levels of economies of scale. And then looking into Q2 and beyond, what I would say is there are still several areas we see that can help us further improve our vehicle first is continue the product mix, as you mentioned, as we introduce new models, even with the model year changes on G6 and G9, we've seen healthier margin compared to the old models. And this in line will also help us to further higher our average sales price. What I would say is the ASP you've seen in first quarter is probably the lowest throughout the will continue to sell better product mix to help us increase average sales price in the following quarters into 2025. The other thing that we continue to see is the mature cost reduction through our supply chain then lastly, based on the volume projection and higher volume potentials in the third and fourth quarter, we should be able to achieve higher scale, which will help us to lower allocations and improved vehicle margins as with all of that, we are pretty confident at this point that going into second half and into Q4, we believe that our total company gross margin should be able to get close to the high teens level to support us eventually achieve profitability in Q4 as we communicated earlier. Thank you. Bin Wang Thank you very much. Operator Johnson Wan, Jefferies. Johnson Wan (interpreted) My question is regarding the humanoid robot. We noticed that iron has received a lot of attention at the Shanghai Auto Show. How are we going to leverage our existing know-how from autonomous driving to robotics? What are the advantages of our products? And also, do we have a specific goal for the mass production of humanoid robot products? Thank you. Xiaopeng He (interpreted) Thank you. So basically, robots or robotics -- robots development, they are operating as an independent center within the company, but it leverages our overall in-house full stack R&D capability. For example, the EEA of our robots are being developed by the EEA team of autonomous driving of our car also the joints within the humanoid robot are being developed by our powertrain team, XPeng Motors and also the other parts, for example, the spinal cord of humanoid robot, the cerebellum, which is the larger brain of the humanoid robot, I mean everything combined is being developed by both the robotic team but -- and also our autonomous driving intelligent driving I would say, well, in addition to that, also our chips, we leveraged the Turing chip capability when it comes to developing our iron or humanoid robot. So I would say 70% of the development among our humanoid robots are coming from the same source as autonomous driving, our obviously, overall, these are two different products. They have different metrics. And so they do have different differences when it comes to their capabilities and features and form factors. So there are differences.(interpreted) I think XPeng is very different from other humanoid robots or robotics company. First of all, we are data-driven. We redefine how we should build a humanoid robot. Also, we have chips that we're developing in-house, the operating system, we can develop in-house, and we also have full stack development capability of our hardware and software. From that point of view, we are really guided by a super strong coupling capability to do things, especially when it comes to developing new products such as humanoid we expect to actually, by 2026, going into certain percentage of mass production capacity and can quickly going into -- can quickly enter a stage of OTA iteration. We also expect to actually bring -- reinforce some very surprising and brand new innovative products to the market, which will look very different from what we can see right now available in the market. Thank you. Johnson Wan Thank you. That's very helpful. Operator Lou Jia, BOCI. Lou Jia (interpreted) My first question is regarding the vehicle margin in Q1. As we see that vehicle margin is negatively impacted by some inventory provision and loss on purchase commitments related to some old models. Wondering if excluding this with our core vehicle margin campaign in future, if this impact will persist. (spoken in foreign language). Brian Gu So we will answer your first question first. Thank you. James Wu This is James. So yes, we do recognize some level of purchase commitments as we change some of our models. One of the things you probably have seen from the media is that we have reviewed the very next generation of P7, which the outlook design has received very well feedback from the market. So that's part of the recognition that we have done in the first quarter around the current generation of P7. We also have recently launched changes for G6 and have been included in the purchase commitments as well. Overall, I would say the impact of these in the scheme of things is relatively small. It doesn't change the overall trend of our margin improvement for the past seven consecutive months. What I would say is looking into the next couple of quarters in 2025, I wouldn't expect the purchase commitments related to our model changes is going to be significant. So you can take that as in your I would focus is, as I mentioned earlier, our vehicle margin, given our continued cost reduction, continued climbing of higher economy of scale as well as the product mix improvement, we forecast vehicle margin to steady growth in the following quarters in 2025. Thank you. Lou Jia (interpreted) So my second question is that looking forward into second half of the year, we will go upscale again by launching more high-priced models, how management get prepared for our primarization? Thank you. Xiaopeng He (interpreted) Thank you for the question. This is Xiaopeng. When it comes to our targeted market segment, I would say our current line of basically feature around RMB100,000 to RMB 400,000 in which MONA is around RMB100,000 to RMB200,000. But basically, across RMB180,000 to RMB500,000 will all be our target market starting from Q3 going into 2026, you can expect to actually see a lot of our new product launch that actually have brand-new capabilities across not only the the design of the car, but also the smart cockpit, overall autonomous driving people will be surprised. And I think a lot of people are going to really love our new launches. And so for example, as you can see from our brand-new P7 and also going -- which will be launched in Q3, we are going to actually integrate new capabilities when it comes to the whole vehicle, the powertrain, the architecture, the smart cockpit and also the craftsmanship.I think all of these areas are something that we're going to focus on in the coming three years. and we believe such an improvement in overhaul of our capability being reflected in our lineup will showcase how great a company XPeng really from our cash performance in recent months and quarters, you can also see that these improvements have been well accepted by the market. And we believe that no matter what price segments that we are targeting in, we are very confident of going into at least the top three, if not the top one, about selling models. In the future, we also are going to launch not only BEV models, but also electric or dual energy vehicles as well. So we're very confident going into our premium market segment. Thank you. Operator Nick Lai, JPMorgan. Nick Lai (interpreted) My first question is pretty simple. It is an too, we saw quite a few points in particular from Japan to launching what they call in China for China with localized supplier, local cost and a very competitive price. And we spoke Toyota, Honda in the past few days, and they indicate that in China in the next few years, they're going to launch a few more such products. So I'm curious to understand from XPeng's standpoint, how should we see the competition dynamic maybe from here? Xiaopeng He (interpreted) Thank you. Yes, we also observed the same trends from the market. I think competition are getting more and more aggressive from not only domestically, but also internationally as well. I think this is something that we will continue to see, and it's something that is destined to happen. But we're very firm on our position, which is technology company -- sorry, carmakers will need to have their technological capability in order to win in such a there will be more and more impact on the market when you have a more powerful technological element, whereas your manufacturing capability or capacity will matter less and less. And also another trend that I want to highlight here is that automakers are going to sort of convert from an integrated R&D format to a model of maybe a single direction full spec R&D of all resources to multi aspects fusion integrated R&D I think it will take time to happen. But we are pretty assured that it's going to take place. So ultimately, no matter how good your sales and marketing teams are doing, you need to be able to deliver the products that popular and that resonates with the customers and fulfill user demands. So we are very happy to see a lot of companies are changing their traditional way of doing are learning from them. We believe that they are learning something from us as well. And I think during this process, we also are able to change ourselves into -- from the full stack R&D kind of way of doing research and development to a fusion integrated R&D ecosystem, entering a matrix of different R&D aspects. We believe that it will allow us become even stronger than logically. And by that time, integrated companies with only integrated R&D capability are going to struggle, especially in the mid- to long-term competition. Thank you. Nick Lai (interpreted) My second question is a really quick update on our partnership with BW. We sold major model on any very quick update on milestone that share can share with us. Thanks. Charles Zhang Hi, Nick, it's Charles. I think the collaboration with Volkswagen has progressed at a very fast speed. And so far, we meet every milestone, and we are currently probably less than one year to SOP of some of our yes, as you rightly pointed out, I think that our partner, Volkswagen unveiled some of the models, for example, one model based on our G9 platform. And also there are multiple models that will be based on the architecture that we are jointly I think that all these models will start to come to market starting from early next year. So, so far, I think that -- I think the -- we are meeting all the milestones. And I think looking forward, I think that we continue, will work with our partner to jointly develop more products. And also we are also exploring potential new opportunities that can bring win-win value to our partnership. Operator Thank you. That does conclude our question and answer session. Now I'd like to turn over the call to the company for closing remarks. Alex Xie Thank you once again for joining us today. If you have further questions, please feel free to contact Xpeng investor relations through the contact information provided on our website or the (inaudible) and financial communications. Operator This concludes today's conference call. You may not disconnect your line. Thank you. Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the company sponsoring this event
Yahoo
21-05-2025
- Business
- Yahoo
Q1 2025 FinVolution Group Earnings Call
Yam Cheng; Head, Capital Markets; FinVolution Group Tiezheng Li; President, Chief Executive Officer, Vice Chairman of the Board, Co-Founder; FinVolution Group Jiayuan Xu; Chief Financial Officer; FinVolution Group Cindy Wang; Analyst; China Rennaisance Alex Ye; Analyst; UBS Yada Li; Analyst; CICC Operator Hello, ladies and gentlemen. Thank you for participating in the first quarter of 2025 earnings conference call for FinVolution Group. (Operator Instructions) Today's conference call is being recorded.I will now turn the call over to your host Yam Cheng, Head of Capital Markets for the company. Yam, please go ahead. Yam Cheng Thank you, welcome. Hello, everyone. Welcome to our 2025 first-quarter earnings conference call. The company's results were issued via Newswire services earlier today and are posted online. You can download the earnings release and sign up for the company's email alerts by visiting the IR section of our website at Mr. Tiezheng Li, our Chief Executive Officer; and Mr. Jiayuan Xu, our Chief Financial Officer, will start the call with the prepare remarks and conclude with a Q&A this call, we will be referring to several non-GAAP financial measures to review and assess our operating performance. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with US GAAP. For information about these non-GAAP measures and the cancellation to GAAP measures, please refer to our earnings press we continue, please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risk and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties are included in the company's filings with the US Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required under applicable we posted a presentation on our IR website providing details of our results for the I would turn the call over to our CEO, Mr. Tiezheng Li. Please go ahead. Tiezheng Li Thanks, Yam. Hello, everyone, and thank you for joining our earnings call. This is Tiezheng Li, CEO of FinVolution Group. We are happy to speak with you are pleased to report that FinVolution delivered strong financial and operational results in the first quarter of 2025. So effective execution of our local excellence, global outlook growth are navigating the expected seasonal softness in the sector, we achieved 10% year-over-year revenue growth fueled by our expanding take rate in China and surging international transaction volume grew robustly, up 36% year over year, complimenting China's slightly 7% growth. These successes job a record-breaking quarterly net profit of RMB738 million. The height since our transition to a loan facilitation model in 2019. This is represented increases of 39% year over year and 8% quarter over quarter, assessment to our operational we are mindful of ongoing microeconomic uncertainties, such as global trade tensions, property sector softening, and evolving regulations in China's consumer finance sector. We maintain a cautiously optimistic outlook. This confidence stems from two fundamental strengths in our business our proven resilience. Since our IPO in November 2017, we have successfully navigated multiple challenges, including our transition to an institutional funding model, Indonesia's regulatory change, and the COVID we have delivered consistent year-over-year growth in both transaction volume and revenue for every single quarter since 2021. This track record demonstrates our ability to adapt to regulatory changes and respond to market dynamics with agility and balance risk management with sustainable our strategic diversification initiatives in international markets continue to mitigate the impact of single country risks. Since entering Indonesia in 2018 and the Philippines in 2020, we have systematically built a broad right tech business designed to reduce geographic concentration risk. Our international business generated a total transaction volume of RMB3 billion in the fourth quarter and 36% year-over-year increase. This is outstanding loan balance growing 46% to RMB1.9 international business contributes 20.4% of total net revenue in the first quarter, up from 18.8% in the same period last year. We are on track to achieve our strategic goal of having international business, contribute 50% of the group's total revenue by customer base remains the cornerstone of our long-term growth. In Q1 2025, we maintained strong momentum in borrower acquisition across our markets, onboarding 1.2 million new borrowers, up 62% year over year. This marked our third consecutive quarter exceeding 1 million new borrowers and showing the effectiveness of our AI powered marketing strategy and diversified user acquisition China, we added 512,000 new borrowers, up 37% year over year. In our international markets, we attracted 652,000 new borrowers, up 90% year over year. This marks the fourth consecutive quarter where international acquisitions have exceeded those in China. We expect this trend to continue, thanks to the rising penetration in online lending, as well as our strategic cooperation with lending e-commerce and e-wallet platforms to acquire borrowers in international markets. Our technology initiatives continue to improve efficiency across our are exploring the use of large language models in risk assessment, leveraging their diverse capabilities to automatically extract and analyze and derive insights from unstructured data in consumer credit reports. For instance, the frequency with which a borrower changes a residential address is unstructured, contextual detail that can provide valuable insights into the stability of borrowers' work and the living conditions. Large language models can automatically capture this type of contextual data and convert it into meaningful structured data that can be integrated into our existing risk assessment model to more comprehensively evaluate users' probability of default. In our recent A/B testing, our model achieved observable statistically significant improvements, indicating enhanced risk assessment effectiveness. We've also made substantial progress in automation through our virtual representative integrating large language model, we will upgrade our natural language processing system with intelligent virtual agents that can handle customers' acquisition and a complex workflow. Looking ahead, we plan to expand their role across additional business functions to further boost operational I wrap up, a brief update on our ESG efforts. Our commitment to sustainable finance continues to deliver meaningful impact. In Q1 2025, we facilitated RMB15 billion in financing for 442,000 small business owners, up 15% and 10%, small business loans represent 30% of our China transaction volume, demonstrating our ongoing support for the backbone of China's economy. We further solidified our position as an industry thought leader by serving as a core contributor to the China Finance Consumer Rights Protection Bluebook, a key industry publication developed in a partnership with the National Internet Financial Association of China. With its release in March, we helped shape best practice in consumer protection and financial literacy conclusion, our strong first quarter performance reflects excellent execution of our effective local excellence global outlook strategy. Looking forward, we are well-positioned to capitalize on emerging opportunities while maintaining the agility required to navigate the evolving diversified footprint technological leadership and commitment to sustainable growth position us well to continue creating value for our that, I will now turn the call over to our CFO, Jiayuan Xu, who will discuss our operational and financial results. Jiayuan Xu Thank you, Tiezheng, and hello, everyone. Welcome to our first quarter 2025 earnings call. Let's go through our key results for the first quarter. To be mindful of the length of our earnings call today, I encourage listeners to refer to our first quarter earnings press release for further details. China's macro environment remained uncertain in the first quarter due to global trade there were some encouraging signs. China's GDP grew by 5.4% year over year, while retail sales rose by 5.9% in March. Total social financing expanded 8.4% in March, up from February. Additive manufacturing PMI remained above 50% in February and March, signaling continued recovery the regulatory front, we are pleased to see policies supporting consumption and consumer finance, including increased liquidity and credit supply to boost consumption. Against that backdrop, we delivered a solid domestic performance by leveraging our operational powers and tech China business achieved an increase in take rate from 3.3% to 3.4% sequentially, thanks to our strong partnerships with 114 funding partners that led to a 10-basis-point decline in funding cost. On the credit front, day one delinquency also improved by 10 basis points to 4.6% and our 30-day loan collection rate held steady at 89%.Turning to our international markets. Although GDP growth in Indonesia and the Philippines showed marginally due to trade tensions and the tariff uncertainty, the overall economy remained resilient, bolstered by a large population with solid domestic consumption credit demand for underserved communities in our foodprint market continues to support our strong growth trajectory. Our total international transaction volume exceeded RMB3 billion for the first time, up 36% year over year and 5% sequentially. Outstanding loan balance rose to RMB1.9 billion, up 46% year over year and 9% sequentially. Our cumulative international borrower base has now reached around 8 million Notably, our unique borrowers sold to a record high of 1.7 million in the first quarter, marking an impressive 106% year-over-year increase. As a result, revenue from international markets increased to RMB711 million, up 19.5% year over for Indonesia, while we experienced some seasonal impact in March due to Ramadan, growth continued at a measured pace in the first quarter. Indonesia's consumer confidence index stayed above 120, maintaining its high level for nearly 2.5 years. Unemployment also reached its lowest level in the past 10 years during the first quarter. The change in the interest rate cap imposed at the end of 2024 has had a limited impact on our business as our average loan tenure in Indonesia is less than 6 months. Moving forward, we will closely monitor potential effects from macro economy and domestic transaction volume in Indonesia reached RMB1.8 billion, up 10% year over year, while outstanding balance hit RMB1.2 billion, up 18% year over year. Our user base continued to expand with unique borrowers reaching 671,000, up 32% year over the interest rate cap overhang resolved, we allocated more resource to marketing and focus on quality growth, driving an increase in our new borrowers to 312,000 this quarter, up 69% year over year and 4% sequentially, bringing cumulative borrowers in Indonesia to 5.3 million. We also continue to diversify into offline consumption loan under the multifinance license we acquired, broadening our reach to near-prime customers through scenarios like mobile phone and electronic purchase. All of these efforts drove solid growth in Indonesia amid the seasonal impact of let's zoom in on the Philippines, where we achieved rapid growth and profitability despite Q1 being the traditional low season. In the fourth quarter, our transaction volume in the Philippines reached RMB1.2 billion, up 118% year over year and 18% sequentially. Outstanding loan balance also grew to RMB693 million, up 142% year over year and 26% sequential increase. It accounted for 37% of our international loan balance compared with 23% in the first quarter of 2024. Our outstanding performance in the Philippines has been driven by several key factors, including ongoing improvements in risk management and deeper collaboration with major e-commerce platforms to expand buy now pay later excellent asset quality has consistently attracted institutional funding partners. This quarter, we onboarded the Union Digital Bank as funding partner with several additional institutions in the pipeline. The percentage of loan facilitated by local financial institutions remained around 70% for the quarter. Buy now, Pay later business continued to grow, contributing 30% of Q1 volume, up from 19% in 2024. Going forward, we are confident of maintaining rapid transaction volume growth in the Philippines as we cement our rules in the country, further expand our funding sources and diversify our business on to our financial metrics. This quarter's operational excellence resulted in a strong financial performance. Net revenue for the quarter reached RMB3.5 billion, marking a 10% increase year over year and a 1% increase sequentially despite the low season. Net income was RMB738 million, representing a 39% increase year over year and an 8% sequential increase. Meanwhile, sales and marketing expenses rose by 18% year over year to RMB530 million as we continue to strengthen efforts to acquire new borrowers of higher qualities in both China and international ratio, defined as risk-bearing assets divided by shareholders' equity improved to around 2.7 times. Our total liquidity position consisting of cash and cash equivalents plus short-term investments remained strong at RMB8.5 billion. Next, a brief update on our ongoing efforts to enhance shareholder value. Since 2018, we have continuously returned value to our shareholders in the form of share repurchase and dividends. Recently, our Board of Directors approved our seventh annual dividend in the amount of USD0.277 per ADS, reflecting a EPS increase of 17% year over dividend was distributed on May 7, 2025, bringing our total dividend distribution to shareholders for fiscal year 2024 to USD70.3 million. In summary, strong execution of our local excellence and global outlook strategy drove continued growth in the first quarter of 2025 despite macro headwinds and seasonal softness. We remain confident in capitalizing on China's recovery while maintaining momentum in our international expansion. As such, we are reiterating our 2025 full-year revenue guidance of RMB14.4 billion to RMB15 billion, representing 10% to 15% growth year over that, I will now hand it over to Q&A. Operator, please continue. Operator (Operator Instructions) And for the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, we ask that you please kindly repeat your question in Wang, China Renaissance. Cindy Wang (spoken in Chinese) Thanks for taking my question and Congrats for the great first quarter results. So I have two questions here. First, with recent new regulation on loan facilitation in China, do you see any business impact from it? And what's our basis adjustment for this?And second, so given the recent US tariff uncertainty, have you seen any impact on the Indonesia or Philippines consumption loan demand since April? And how do you expect the international new loan volume in second quarter? Thank you. Jiayuan Xu Okay. Thanks, Cindy. I will take your first question, and Tim will take your second question. Well, your first question is about the new regulations. Yes, it's about the loan facilitation model and the new regulation was announced in April and will be effective in October.I think it's the first time to clearly define the core model of loan facilitation as the loans issued by the traditional financial institutions through the external third-party platforms. So it marks the official inclusion of the loan facilitation business in China's financial regulatory framework and to reference the regulatory authorities formal recognition across the sector. Meanwhile, we noted that the regulations were just following the regulators' focus on consumer finance. We believe it's a positive signal to promote the healthy development of the industry and then to encourage the increase in supply of consumer finance products and boost the consumers' confidence. And if we look at some details in the regulation, we can find the final version to be relatively moderate stance compared with the draft ones as the focus is more on qualitative aspects than the quantitative according to the regulation, banks now are required to implement a white list management system for those cooperative Internet platforms. And the financing costs are clearly defined with all revenue costs should be included and disclosed in the contracts. So we think it will promote the industry's compliance level and benefit those leading platforms, which have the adequate capital, the strong risk management capabilities and high compliance standards. So in conclusion, we believe the overall impact of the new regulation is manageable and it's very -- it's crucial for the long-term development of the industry, okay? Tiezheng Li Cindy, I will answer the second question. Yes, we do have observed the global trade tensions, have introduced certain economic challenges to Southeast Asia. Some of the trade-oriented economies in the region are encountering slower-than-expected economic growth. And right now, many countries are currently engaged in negotiations with the United States to secure favorable tariff rates. And this year, the macroeconomic trend of Indonesia and the Philippines are the first quarter, Indonesia's GDP growth rate decreased to 4.9%, slightly below the 5.2% target. And PMI in April declined by 11% month-on-month to 46.7%. While in the Philippines, GDP growth came in at 5.4%, up slightly by 0.1% from previous quarter and keeping it among Asia fastest-growing economies. Domestic demand continues to drive the economy with consumer spending making up nearly 80% of GDP in Q1. Fortunately, our customers are mainly consumers and the loan demands are less affected by the trade the ground, we've seen some seasonal softness in Indonesia. Remittance slowed things down a little bit, but volume were still up nearly 10% year over year. We expect a nice rebound in Q2 with sequential growth. In the Philippines, it's been a strong start in Q1. Volume jumped 18% quarter on in Q2, we are projecting another solid quarter with good sequential growth. Thank you, Cindy. Operator Alex Ye, UBS. Alex Ye (spoken in Chinese) So I have two questions. First one is on the loan application demand trend in China in the past two months. And do you plan to tighten the credit approval preemptively given the rising macro uncertainty? And how would that impact your full year's loan volume outlook?The second question is regarding the drivers for the improved take rate for the China business and the outlook ahead. Thank you. Jiayuan Xu Thanks, Alex. I will take your questions. Your first question is about the credit demand in April and May. We have delivered solid results in the first quarter. And in terms of the loan application demand, we observed the rate holding steady in April and April, we saw a slight month-over-month decline and rebounded in May has surpassed the March levels. And historically, the main demand tends to be softened slightly due to the seasonal holidays. But this year, we are seeing the moderately better demand. Yes, so that's about the application rate. And in terms of the credit performance, yes, it showed steady improvement in the first quarter and have remained stable in the second quarter so the macro economy still has a lot of uncertainties and given the moderately supportive demand, we have selectively adjusted our risk appetite for marginal assets. And meanwhile, we will closely monitor the macroeconomic trends and the industry development and will dynamically balance between the risk management and the business growth. The performance of April and May, the transaction volumes indicate that a healthy growth trajectory has emerged. So given our current business performance and operation capabilities, we are confident in achieving our guidance of 10% to 15% full-year revenue growth, okay? So that's about the first your second question is about the take rate in our domestic business. Yes. In the first quarter, our take rate in China increased by 10 basis points sequentially, primarily driven by several factors: number one, we further improved the funding cost by 10 basis points quarter-over-quarter; and number two, our loan tenure extended slightly from 8 months to 8.2 months with the improved risk performance. Currently, both risk metrics and funding costs are at historical favorable levels. And looking ahead, we expect that both will remain it will stabilize the take rate at current level. We will continue to drive high-quality growth in China market with refined operations and management. Operator Yada Li, CICC. Yada Li (spoken in Chinese) Then I'll do the translation.I was wondering if you could give more color on the latest business updates regarding the international expansion. Any guidance for revenue and profit in 2025? And besides Indonesia and Philippines, could you elaborate more about the development of other regions as well? That's all. Thank you. Jiayuan Xu Okay. Thanks, Yada. I will take your question. Well, for international markets, despite the uncertainties in the macroeconomic environment, with our proven technological capabilities and the risk control expertise across those diverse markets, it enabled us to deliver a strong first quarter performance. The transaction volume in our international market surpassed RMB3 billion for the first time in this quarter with a year-over-year increase of 36% and a quarter-over-quarter increase of 5%.And the number of unique borrowers reached a historical high at 1.7 million with a triple-digit year-over-year growth. And the revenue from our international market boosted to RMB711 million, marking a year-over-year increase of nearly 20% and accounting for 20.4% of total revenue. And in terms of the revenue and the profit, we maintain our full year revenue growth target of 10% to 15%. The contribution from international markets is expected to increase to 25%. That indicates the growth rate of international revenue will outpace the overall the first quarter, Indonesia and the Philippines collectively achieved a modest profit aligned with our projection. And looking ahead, we expect they will generate a minimum net profit of $10 million in our expansion into the new markets, we have mentioned in the early earnings call, we shared that we recently obtained the banking finance company license in Pakistan. And operation in Pakistan is still in an early stage. Meanwhile, we were actively exploring the new countries to support our long-term means we will -- we aim to deliver at least 15% revenue contribution from international markets by 2030. We would be happy to share if there are any updates. Operator As there are no further questions at this time, I'd now like to turn the call back over to the company for closing remarks. Yam Cheng Okay. Thank you once again for joining us today. If you have any further questions, please feel free to contact us and our Investor Relations team. Thank you so much. Operator Thank you. This concludes this conference call. You may now disconnect your lines. Thank you.
