Uxin Q4 2025 Earnings Call Transcript

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April 30, 2025

There are 3 speakers on the call.

Operator

and welcome to the Yixin Fourth Quarter and Full Year twenty twenty four Earnings Conference Call. At this time, all participants are in listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr.

Operator

Jack Wang. Please go ahead, sir. I would now like to turn the conference over to your host, Mr. Jack Wang. Please go ahead, sir.

Speaker 1

Thank you, operator, and hello, everyone. Welcome to Yixin's earnings conference call for the fourth quarter and full year ended 12/31/2024. On the call with me today, we have D. K, our Founder and CEO and Zhang Lin, our CFO. D.

Speaker 1

K. Will review business operations and company highlights, followed by John, who will discuss financials and guidance. They will both be available to answer your questions during the Q and A session that follows. And before we proceed, I would like to remind you that this call may contain forward looking statements, which are inherently subject to risks and uncertainties that may cause actual results to differ from our current expectations. For detailed discussions of the risks and uncertainties, please refer to our filings with the SEC.

Speaker 1

And now with that, I will turn the call over to our CEO, DK. Please go ahead, sir. Good day, everyone, and thank you for your continued interest and support. It's a pleasure to welcome you on our earnings call today. And to better communicate with our domestic and international investors, I will be discussing our performance over the last year as well as providing insights into our prospects in both Chinese and English.

Speaker 1

Twenty twenty four was a challenging year for the broader Chinese economy marked by ongoing macroeconomic headwinds and an intense price war in the new car segment that weighed on the used car market. And despite these pressures, China's used car industry continued its upward trajectory. During 2024, China's used car annual transaction volume reached 19,600,000 units, up 6.5% year over year, outpacing the 4.5% growth rate of the new car market during the same period. Policy tailwinds have also played a supportive role. Beginning in September, a number of local governments introduced the trade in subsidy programs, which helped stimulate vehicle turnover that in turn stabilized and revived the market demand.

Speaker 1

We are especially proud of the strong performance of our superstores operations in 2024. This success further validates the scalability and replicability of our superstore of our business model. And in the sessions that follow, I will outline four key milestones that reflect our progress. First, fueled by our industry leading product and service capabilities, Yixin's used car retail business delivered growth that significantly outperformed the broader market. In 2024, our retail transaction volume rose from approximately 3,100 units in the first quarter to 8,500 units in the fourth quarter, achieving over 30% quarter over quarter growth for three consecutive quarters.

Speaker 1

And for the full year, retail transaction volume reached nearly 22,000 units, representing a year over year increase of more than 130. This remarkable growth was underpinned by enhanced operational execution across our business. We scaled our inventory levels in a disciplined manner, ending the year with stock roughly three times higher than at the start of 2024. At the same time, we maintained an efficient inventory turnover cycle of approximately thirty days, which supported sustained sales growth. Second, as we scaled our operations, we also continued to strengthen brand equity and customer loyalty in the core markets where our superstores operate.

Speaker 1

We actively collected and analyzed customer feedback to refine our after sales service processes, improving response times and elevating service quality. As a result, our net promoter score reached 65 in the fourth quarter, up from an average of 60 in the prior year, further reinforcing our position as a trusted leader in China's used car retail landscape. At the same time, we continue to strengthen our digital capabilities leveraging data to build intelligent technology driven decision making across every aspect of our operations. Recently, we began integrating large language models into our business processes to further enhance efficiency in areas such as pricing, vehicle reconditioning and customer acquisition. The use of digital technologies is enabling greater standardization and scalability across our platform, laying a solid foundation for the large scale replication and expansion of our superstore model.

Speaker 1

And lastly, our financial position continues to strengthen. In the fourth quarter of twenty twenty four, we delivered a positive adjusted EBITDA for the first time on a quarterly basis. As our sales volume grows and we are starting to achieve meaningful economies of scale, Our gross margin has improved from 4.8% in the fourth quarter of twenty twenty three to 7% in the same period of 2024. With additional superstores coming online and our business scale expanding, we are confident in our ability to deliver sustainable and growing profitability in the quarters and years ahead. Looking ahead to 2025, we will continue to build on the foundation of our large scale superstore model, executing a disciplined regional expansion strategy to further scale our operations and drive profitability.

Speaker 1

First, we aim to unlock additional capacity at our existing superstores and increase our market share in their respective cities. Currently, both our Xi'an and Hefei superstores are operating at less than 50% of their full capacity. In 2025, we plan to continue ramping up inventory at these locations while maintaining efficient turnover cycles to support sustained growth in retail volume. Second, we plan to open between Q2 for new superstores in key regional markets while strengthening our integrated onlineoffline retail ecosystem. As previously disclosed, Yixin has entered into partnerships with the local governments in Wuhan and Zhengzhou to establish new superstore operations.

Speaker 1

Both cities have populations exceeding 12,000,000 and vehicle ownership bases of over 5,000,000 units representing highly ideal markets for expansion. Our Wuhan Superstore began trial operations in February of twenty twenty five and our Zhengzhou Superstore is on track to open in the second half of the year. In parallel, we are actively identifying and preparing additional locations to support new store launches in the coming years. Third, for our full year operational targets in 2025, we aim to achieve another year of over 100% growth in retail transaction volume and to deliver our first full year positive adjusted EBITDA. As we pursue the expansion, we remain committed to maintaining the long term health of our financial position.

Speaker 1

Now China's car ownership has surpassed three fifty million vehicles. As an increasing number of these vehicles enter the secondary market, the trillion used car sector is expected to maintain strong growth momentum over the next five to ten years. The sector is evolving towards a new phase of growth defined by brand oriented large scale and standardized development. As a pioneer and leader in China's used car industry, Yixin is well positioned to lead this transformation. Through our modernized retail experience professional vehicle reconditioning capabilities and a highly efficient data driven operating model, we are setting new benchmarks for the sector's advancement.

Speaker 1

We remain fully committed to delivering the best used car products and services to our customers and to generate long term value for our shareholders, many of whom have supported us through every phase of our journey. And with that, I'd like to turn the call over to our CFO to walk you through the financial results. John, please go ahead. Thank you, DK, and hello everyone. I will now share an update on our financial performance.

Speaker 1

We delivered another quarter of strong results in the fourth quarter of twenty twenty four. Retail transaction volume reached 8,554 units representing a 42 increase quarter over quarter and a 178% increase year over year significantly outperforming the overall China used car market which recorded a year over year growth rate of approximately 10% during the same period. This marks the third consecutive quarter in which our retail volume has grown by more than 100% year over year. Total retail revenue for the quarter was RMB553 million, up 25% sequentially and 73% year over year. Our average selling price or ASP for retail vehicles decreased from RMB104000 in the same quarter last year to RMB65000 this quarter, primarily due to the broader shift in vehicle mix.

Speaker 1

However, the substantial increase in sales volume more than offset the impact of lower ASP on overall revenue. Our current inventory is well positioned to meet the needs of a broad base of consumers and we expect ASP to remain stable going forward. On the wholesale side, we sold eight eighty five units in the fourth quarter, representing a 15% sequential decline and a 31% year over year decline. Wholesale revenue for the quarter was RMB25.5 million. Combining retail and wholesale operations, total revenue for the fourth quarter was RMB597 million, representing a 20% sequential increase and a 45% year over year increase.

Speaker 1

Our gross margin for the fourth quarter was 7% remaining stable compared to the previous quarter and improving by 2.2 percentage points from 4.8% in the same period last year. Over the past two quarters, we have maintained the gross margin at a relatively stable level. And looking ahead with a recovering market environment and increasing penetration of value added services, we see meaningful upside potential for further gross margin expansion. While delivering strong revenue and volume growth, we continue to implement strict cost and expense control. As a result, we achieved positive adjusted EBITDA for the first time in the fourth quarter compared to an adjusted EBITDA loss of RMB43.8 million in the same period last year.

Speaker 1

Turning to our full year 2024 results, retail transaction volume totaled 21,773 units representing a 134% year over year growth. Full year retail revenue was billion, up 56% year over year. Total revenue reached RMB1.814 billion, an increase of 30% year over Our full year adjusted EBITDA loss narrowed significantly to RMB80.8 million, an improvement of RMB96.3 million compared to 2023, representing a year over year improvement of nearly 54%. We have disclosed additional details regarding our full year financial performance in our recently published fourth quarter and annual results. So I will not repeat all the figures here.

Speaker 1

In addition, in March 2025, we completed a $27,800,000 financing agreement with our investors, of which $19,000,000 have already been funded. This significantly strengthened our cash position ensuring that we have sufficient liquidity to support our business development needs throughout 2025. So following a prudent assessment of our funding plan and operational outlook, our auditor concluded that our financial resources are adequate to support operations for at least the next twelve months and beyond. And accordingly, the substantial doubt about going concern disclosure has been removed from our audit opinion. Turning to our outlook for the first quarter of twenty twenty five, while the first quarter is traditionally a seasonally soft period for the used car industry due to Chinese New Year holiday, we expect retail transaction volume to be between 414,500 units, representing more than 140% year over year growth.

Speaker 1

This will mark our fourth consecutive quarter of year over year retail volume growth exceeding 100%. Total revenue for the first quarter is expected to be between RMB $490,000,000 and RMB 500,000,000. And lastly to reiterate DK's earlier comments on our full year outlook. In 2025, we plan to open two to four new superstores. With the continued ramp up of our existing two locations and the launch of new stores, we are confident in maintaining over 100% year over year retail volume growth for the full year and achieving positive full year adjusted EBITDA.

Speaker 1

And that concludes our prepared remarks for today. Operator, we are now ready to take questions.

Operator

Thank you, sir. At this time, we will be conducting a question and answer session. The first question that we have comes from Fei Dai of TF Securities. Please go ahead.

Speaker 2

Over the past year, the company's cash balance has remained relatively low. However, we noticed that in your fourth quarter results, your auditor removed their substantial doubt regarding your ability to continue as a growing concern. Could you please update us on the current cash position and whether it is sufficient to support future business development, including the investments in new superstores? Thank you.

Speaker 1

Hi. This is John and I'll take this question. Over the past year, we prioritized allocating our capital to expanding inventory levels, which resulted in maintaining a relatively low cash balance. As our inventory expanded, our sales volume grew rapidly. Our profitability improved and you must have confidence in new things strengthened significantly.

Speaker 1

This led to further investment to support our business expansion. Based on the term sheet we signed in 2024, we entered into a formal financing agreement with investors in March 2025 for an aggregate amount of US27.8 million dollars Of this amount, dollars 19,000,000 has already been funded with the remainder in the process of being delivered. As a result, our current cash position has improved significantly compared to the end of last year. Following a careful review of our operational plans and funding arrangements, our auditor concluded that our financial position is sufficient to support future operations and no longer expressed substantial thought regarding our ability to continue as a growing concern. Now regarding new superstore investments, the capital expenditures will be faced.

Speaker 1

Aside from the initial setup costs for reconditioning facilities, vehicle purchases and operating expenses are gradually deployed as inventory scales. In addition to using our own cash, we also leverage other funding sources. For example, local governments provide direct investment support for our operations in certain cities such as Wuhan and Zhengzhou. Furthermore, we utilized inventory of financing services from banks and the financial institutions to reduce our own capital commitments for vehicle purchases. Overall, the amount and pace of our capital deployment for new superstores are highly manageable and under control.

Speaker 1

So to summarize my answer, our financial position is steadily progressing on a solid trajectory with disciplined cash management and strong investor support. Our current cash reserves are sufficient to fund the growth of our existing superstores and the rollout of new superstores throughout 2025. That's our answer to your first question.

Speaker 2

The company's stock price has experienced a notable increase over the past year. Could management share your views on the current stock performance? Thank you.

Speaker 1

Okay. I will take this question as well. First, we appreciate your interest in our stock performance. We believe that the increase in our share price reflects to a certain extent investors growing interest in China's used car industry. Their recognition of Yixin's business model and their confidence in Yixin's future growth prospects.

Speaker 1

As you know, China is world's largest automobile market with over four fifty million vehicles in operation. The used car sector represents a trillion RMB opportunity. Compared to developed markets where the ratio of used car to new car transactions is approximately three to one, China's ratio stands at just 0.6 to one indicating more than four times the potential growth opportunity. Yixin is currently the only U. S.

Speaker 1

Listed company exclusively focused on used car retail in China. We believe that as long as investors are paying attention to China's used car sector, using will naturally be a key focus. The second among used car retailers in China, our largest scale superstore model is truly differentiated. By combining a modern retail experience, and once the vehicle reconditioning capabilities and a highly digitized management system, we are reshaping the traditional used car business. Our model has been strongly endorsed by customers as reflected in our industry leading net promoter score.

Speaker 1

Our Xi'an and Hefei superstores have already become leading destinations for used car purchases in their respective regions. The third, we expect our business to sustain high growth over the coming years. In 2025, we plan to open two to four new superstores and we're actively advancing the development of additional sites in other regions. As each superstore matures operationally, we expect to remain on a trajectory of strong and accelerating growth for the foreseeable future. Our ultimate goal is to create long term value for our shareholders.

Speaker 1

At this stage, we are fully focused on educating sorry, executing our business strategy and delivering operational excellence. The same time, we're committed to keeping investors informed about our business progress in a timely manner. We sincerely appreciate your continued attention and support. Okay. Thank you.

Speaker 1

And that's our answer to your questions.

Operator

Thank you. At this stage, there are no further questions on the conference call. I will now hand over to Jack for any pre written questions.

Speaker 1

We actually have another question from Gary Dvorchak with Water Tower Research who has sent over his questions beforehand. So we'll take this opportunity to answer that as well. This question is given the recent trade tensions between China and The U. S, how does management view the outlook for China's used car market in 2025? Are there going to be any major challenges anticipated?

Speaker 1

This is D. K. And I will answer this question. While trade tensions between China and The U. S.

Speaker 1

May have some impact on the new car industry, we believe there will be minimal direct impact on China's used car market. Our business is primarily domestic operating within China's internal circulation economy and at this time we have not observed any direct effects. Overall, we remain relatively optimistic about the outlook for China's used car market in 2025. In response to escalating trade frictions, the Chinese government has introduced multiple measures to stimulate domestic demand. These include expanding the trade in subsidy program with total subsidies across sectors such as automotive and home appliances doubling to RMB300 million in 2025.

Speaker 1

The Ministry of Commerce has also reiterated its support for the used car industry announcing initiatives to reform auto circulation consumption and promote efficient used car transactions and the broader automotive aftermarket. As more replacement activity occurs, the supply of high quality used vehicles is expected to increase further accelerating transaction volumes. On the other hand, if trip tensions persist and broader economic headwinds materialize, we believe more consumers will shift to focus more on value for money leading to increased demand for used vehicles. For Yixin, with the ongoing ramp up of our existing superstores and the launch of new locations, we expect to maintain over 100% growth in our retail sales volume in the coming year. Regardless of external market fluctuations, we believe that our growth trajectory will continue to significantly outpace that of the industry average in the years ahead.

Speaker 1

We will also continue to monitor market dynamics closely and adjust our strategies as needed to ensure that our company to ensure our sustainable long term development. That's our answer to the question. Yes, that's our answer to the question. Operator, we can move on.

Operator

Thank you, sir. At this stage, there are no further questions on the conference call. Would you like to make any closing comments?

Speaker 1

Yes. Thank you. Thank you all for joining today's call and for your continued support in Yuzheng. We look forward to speaking to you again soon in the future. Thank you, everyone.

Operator

Thank you. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.

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Earnings Conference Call
Uxin Q4 2025
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