Release Date: September 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Uxin Ltd (UXIN, Financial) achieved a 31% sequential increase and a 142% year-over-year growth in retail sales, with 4,090 units sold in the first quarter of fiscal year 2025.
- Customer satisfaction reached a new high with a Net Promoter Score (NPS) of 65, maintaining the highest score in the industry for nine consecutive quarters.
- The company is on track to achieve adjusted EBITDA profitability by the December quarter of 2024, driven by strong business momentum.
- Uxin Ltd (UXIN) has secured a USD7.5 million financing agreement with Dida, enhancing liquidity and supporting inventory growth.
- The company is expanding its network of superstores, including a new strategic partnership with the local government in Zhengzhou, which will enhance market presence and drive sales growth.
Negative Points
- The average selling price (ASP) of retail vehicles decreased from RMB111,000 to RMB79,000, impacting overall revenue despite higher transaction volumes.
- Wholesale transaction volume declined by 3% year-over-year, with total wholesale vehicle sales revenue at RMB63.9 million.
- The company's cash position as of June 30 was relatively low, raising concerns about financial stability.
- Adjusted EBITDA loss for the quarter was RMB33.9 million, although it showed improvement from the previous quarter.
- The company faces ongoing market disruptions due to aggressive pricing competition in the new car market, which has impacted the used car sector.
Q & A Highlights
Q: Can you elaborate on the specific factors driving the strong retail sales growth? And do you think this growth rate is sustainable?
A: There are three key factors driving the significant increase in sales. First, the overall used car market is starting to recover as the aggressive pricing competition in the new car market has eased. Second, our operations have matured, leading to higher sales conversion rates. Third, we proactively expanded our inventory levels, providing customers with a wider selection of vehicles. Looking ahead, we expect sales growth to remain strong, forecasting a sequential growth of over 40% for the next quarter.
Q: The company's cash position as of June 30 is relatively low. Could you provide more detail on your financial management plans and how you will support future business growth?
A: Our operating cash flow has improved significantly, and we've secured new investments to enhance our liquidity. We are efficient with our cash usage, directing the majority of our funds towards increasing retail inventory. Our primary focus for cash allocation will remain on boosting inventory levels. We operate under two core financial principles: ensuring the company's financial position is secure and fully supporting our business growth.
Q: Can you share more about your recent observations on market conditions and how consumer demand for used cars has been evolving in the current economic environment?
A: The price wars in the new car market have led to a continuous decrease in the average transaction prices in the used car market. Lower vehicle prices have opened up a broader market, enabling more consumers to purchase better vehicles with smaller budgets. Regardless of the economic situation, consumer expectations for product and service quality are increasing. Our integrated model of offline superstores and online national sales capacity can fulfill the broadest consumer needs.
Q: What are the key areas you are focusing on to drive continued growth?
A: We are focusing on three key areas: increasing our inventory levels, acquiring more vehicles from individual car owners, and enhancing the penetration of value-added services through our one-stop shopping experience at our offline superstores and reconditioning centers. This strategy will further improve our profit gross margin.
Q: Can you provide more details on your strategic partnerships and expansion plans?
A: We are continuing to expand our network of superstores. In July, we reached a strategic partnership with the local government in Zhengzhou to establish a new superstore. We are also actively engaging with several other cities and expect to finalize one to two more strategic partnerships with local governments soon. This expansion will significantly enhance Uxin's market presence in new regions, driving further sales growth and improving our overall business performance.
Q: How has the company's financial performance been in the first quarter of fiscal year 2025?
A: Our quarterly retail transaction volume reached 4,090 units, representing a 31% sequential increase and a significant 142% year-over-year growth. The total retail vehicle sales revenue for the first quarter was RMB325 million, reflecting a 74% year-over-year increase. Our gross margin was 6.4%, which remained stable compared to the previous quarter. Our adjusted EBITDA loss for the quarter was RMB33.9 million, reflecting a reduction of RMB5.9 million from the previous quarter.
Q: What are your expectations for the second quarter of fiscal year 2025?
A: We expect the retail transaction volume to reach between 5,800 to 6,000 units, representing a sequential growth of over 40%. Total revenues are expected to be between RMB480 million and RMB500 million. We also anticipate that our adjusted EBITDA loss will narrow significantly to under RMB10 million. We remain confident in achieving positive adjusted EBITDA in the third quarter.
Q: Can you provide more details on the recent financing agreement with Dida?
A: We secured a USD7.5 million financing agreement with Dida, a company listed on the Hong Kong Stock Exchange. This capital injection will further support the company's efforts to increase vehicle inventory, driving continued growth in our retail sales. Our primary focus for capital allocation will remain on increasing inventory.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
