SunCar Technology Group H2 2024 Earnings Call Transcript

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April 29, 2025
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Operator

Greetings and welcome to SunCar Technologies Full Year twenty twenty four Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms.

Operator

Jennifer Zhang, IR Director. Thank you. You may begin.

Jennifer Jiang
Jennifer Jiang
IR Director at SunCar Technology Group

Thank you, and thanks, everyone, for joining us today for Suncast Full Year twenty twenty four Earnings Call. Please note that our earnings press release was issued yesterday, and annual report on Form 20 F was filed with the Securities and Exchange Commission on April 28. Both are available in the Investor Relations section of our website at http'ssankatec.com. Joining us on the call today are Suncast's Chairman, CEO, Zai Chang Ye and Bro Worker, Chief Strategy Officer. The format of today's call will begin with the opening remarks from Chairman Ye, followed by our financial and business update from Mr.

Jennifer Jiang
Jennifer Jiang
IR Director at SunCar Technology Group

Worker. Afterwards, we'll move into a question and answer session, addressing the questions submitted by investors. We thank everyone for submitting these questions. Before we get started, I'm going to review the safe harbor statement. Please note that today's discussion will contain forward looking statements made under the Safe Harbor provision of The U.

Jennifer Jiang
Jennifer Jiang
IR Director at SunCar Technology Group

S. Private Securities Litigation Reform Act of 1995. Forward looking statements involve inherent risks and uncertainties. As such, our results may differ materially from the views expressed today. Further information regarding this and other risks and uncertainties are included in the company's annual report on Form 20 F for the year ended 12/31/2024, and in other documents filed with the U.

Jennifer Jiang
Jennifer Jiang
IR Director at SunCar Technology Group

S. Securities and Exchange Commission. Sun Card Technology does not assume any obligation to update any forward looking statements except as required under applicable law. With that, I would like to turn over the call to our first speaker, Mr. Zai Chang Ye, Zankos' Chairman, CEO.

Zaichang Ye
Zaichang Ye
Chairman, Director and CEO at SunCar Technology Group

Good morning. Thank you, Jennifer. Sun Car's business is 100% focused on digitalizing China's domestic auto insurance and services markets. Whatever happens in international politics, China still has the largest auto market in the world. Our target market has over three thirty million drivers who still buy auto insurance and services offline.

Zaichang Ye
Zaichang Ye
Chairman, Director and CEO at SunCar Technology Group

We remain dedicated to offering digital solutions to make those drivers' auto insurance and services experience more efficient and cost effective. I'm incredibly proud of the Suncar team's hard work in achieving this year's record revenue and profitability. I also appreciate our customers, including some of the world's most respected companies. Our revenue of $442,000,000 and an almost 500% increase in adjusted EBITDA demonstrates sustainable growth as we scale the business. In 2024, our reinsurance business continued to experience strong growth due to our auto partners increasing focus on capturing insurance revenue.

Zaichang Ye
Zaichang Ye
Chairman, Director and CEO at SunCar Technology Group

We are excited about the Tesla partnership, which grew to 48 cities from six earlier in the year. For Xiaomi, we built a customized insurance product that entered the market early in the year. We are excited about the innovation we are working on with all our auto partners. In the gas vehicle segment, we signed a contract with SAIC Maxis to enable its dealers to sell insurance more effectively. While EV sales have multiplied in China, the gas vehicle market is still much larger in terms of existing vehicles and insurance renewals.

Zaichang Ye
Zaichang Ye
Chairman, Director and CEO at SunCar Technology Group

This largely untapped market represents a significant growth opportunity for SunCar as car dealers desperately need our technology to capture downstream insurance revenue. In our auto services business, we see exciting growth opportunities in the retail and internet sectors while continuing to expand within our traditional bank and insurance customers. Our contract with Sam's Club demonstrates that the retail industry realizes SunCars auto services can increase customer lifetime value. We supported Chanel's twenty twenty four Hangzhou Show in the luxury sector by providing high quality transportation services for its VIP guests. Finally, Suncor is excited about innovation at its ANGI AI Technology Service Center.

Zaichang Ye
Zaichang Ye
Chairman, Director and CEO at SunCar Technology Group

Our investment in AI technology and software has had a very positive ROI as the products we are developing are proprietary and of significant value to our customers. We look forward to continued growth in 2025 as we execute on our considerable market opportunity, build deeper partnerships with our customers and accelerate our exciting product development efforts. With that, I'll turn it over to Bro.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

Thank you, Zai Chun, and thank you all again for joining us. As many of you likely saw, I recently transitioned to the Chief Strategy Officer role at Suncar after serving as a consultant to the company for the past year. During this time, I've come to gain a deep respect for Suncar's team and the significant market opportunity in front of us. China's auto insurance market is rapidly transitioning away from the outdated offline processes and realizing the value of digitalization. Because the Suncar team has been in this market for almost twenty years, they deeply understand the nuances of this market transition.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

They saw this digitalization trend in advance and responded to the market opportunity. Our customers have clearly shifted their focus from new vehicle sales to optimizing and monetizing the customer's post sale experience. This is where Sun Car really shines as our platform is very effective at driving downstream insurance, insurance renewal, and services revenue. As I have learned more about our customer relationships, I realize how much value our auto partners place on SunCars platform, that they have a strong interest in working with us to develop new products. As the company increases its focus on software and AI related product development, I'm excited about the increased value we're delivering to our partners.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

I didn't fully appreciate the breadth of the products we were co developing with our partners until I went to our Angi AI technology center and saw the product demos. They were compelling in the innovative features inside the driver apps and the customized management platforms for our EV partners. For those of you new to Suncor, I'll provide a brief background on the company and our business before discussing the year's operational and financial highlights followed then by Q and A. Since our founding in 02/2007 Suncor has built technology to improve the process of buying and selling auto insurance and auto services in China. We operate in three segments auto insurance, technology services and auto services.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

In our auto insurance business our cloud and mobile apps facilitate the sale of auto insurance underwritten by major insurance companies and sold by our network of over 64,000 sales partners. We received commissions from the insurance companies based on a percentage of the premium paid by the policyholder. We have sales branches in 20 provinces in China giving us extensive coverage of the Chinese market. On the supply side, we have relationships and network integrations with 85 insurance companies, including the top 10 insurers with a combined market share of over 90%. Our cloud platform empowers our insurance company partners to manage all aspects of their business, including customer orders, products, commissions, and reports.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

Suncor has innovated extensively around the insurance sales process. Most notably, we have invented technology that produces an accurate quote within two minutes simply by scanning a license plate. For insurance buyers, our online and mobile insurance interfaces provide real time quotes, pricing, underwriting, payment information, and access to a full spectrum of insurance products. Our hybrid cloud infrastructure provides secure storage and robust data analytics capabilities to support insurance companies and their end customers. In our auto services segment, we offer a network of customized auto services to enterprise customers including major banks, insurance companies, and enterprises that have end customer demand for auto services.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

In a country without AAA or convenient access to high quality auto or transportation services, Suncar provides a valuable service to Chinese drivers. Our enterprise customers purchase access to our auto services as a benefit for the members of their rewards or similar customer marketing programs. Our extensive service network serves over 1,400 enterprise customers and customers. We have built our business on an industry specific technology platform that enables and facilitates market leading B2B auto services. We have secured 160 registered copyrights of computer software in this area.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

Our proprietary technology solution is based on a multi tenant platform and cloud infrastructure. Our digital platform provides APIs, front end interfaces, integration for enterprise customers, and efficient user friendly management and operations tools for service providers. Our technology service business offers customers modular software management tools such as customer relationship management, order management, finance management, and visual analysis systems running on a proprietary hybrid cloud platform. Auto service providers and insurance sales partners may use all or some of these online tools to manage their daily work, us the opportunity to monetize the online software we built. In our insurance segment, one of the key themes of 2024 was the rapid growth of our partnerships with auto partners to develop new products and help them remain connected to drivers after the initial vehicle sale.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

As I mentioned above, the auto industry's new focus on downstream wholesale revenue is a significant trend that positively impacts our business. We are developing applications in conjunction with our EV customers that enable them to stay better connected to customers and sell more downstream services such as insurance and maintenance. With SunCars ability to embed or integrate its insurance app into our customers existing vehicle apps, our increased collaboration with these partners continues to drive strong growth. In 2024, we launched a customized insurance product with Tesla China, which received very positive customer feedback for being user friendly and valuable. Our product is helping Tesla acquire insurance customers more cost effectively while creating downstream revenue opportunities in maintenance and other services.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

Suncor is very excited about the success of our ongoing collaboration with Tesla, which is expanded to 48 cities nationwide from an initial six at the start of the year. We are working together to offer drivers the best possible insurance experience. We continue to develop our partnership with Xiaomi, where we began selling customized insurance products with their first vehicle deliveries. With Zika, we've signed a contract that utilizes our SaaS platform to develop and integrate our insurance product into Zika's app ecosystem. Our partnerships with other leading EV manufacturers have also progressed.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

These partners include Neo, Zeeker, Li Auto, Xiaopeng, Siri's, Leap Motor, SAIC and Chang'an Avatar. The success of our collaborations and the effectiveness of our insurance products have driven GMV growth beyond expectations. The company continues to expand its e insurance business into the gas vehicle market. We secured a two year agreement with SAIC Maxis, a leading commercial vehicle manufacturer to enhance insurance sales management across its dealership network. For gas vehicle dealers, we are integrating our insurance systems directly into the dealers existing insurance management systems.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

Starting with the China And Dipal Dealer Group, we enable seamless insurance product sales at the point of vehicle purchase. We've hired four regional managers to support this rollout and drive adoption and dealer engagement. In our auto services business, we're excited about the growth in new segments such as retail and luxury and the expansion of our long standing partnerships with China's leading banks, insurance and auto companies. Committed to remaining the technology leader in the market, the company is utilizing AI extensively to improve the efficiency of our auto services network. Our luxury concierge service continues to experience significant expansion into new sectors.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

We provided high end limousine services for leading luxury brands including Chanel, Dior and Omega. Most notably supporting Chanel's twenty twenty four Hangzhou show by providing high quality transportation services for its VIP guests. In the retail sector, we signed an exclusive partnership with Sam's Club to offer car wash services for premium members across 17 major cities in China. Suncor is excited about our increased cooperation with China's major Internet companies. Last year, we renewed car wash service agreements with Didi, Meituan and Alipay and signed a new car wash partnership with Douyin.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

We expanded our Alipay collaboration with their car life channel discounts into their Car God program. Finally, we launched a strategic partnership with Ant Fortune to offer exclusive airport limousine services to Ant Fortune Black Card V3 members targeting high net worth clients. We continue to increase our cooperation with bank customers by offering new auto services to existing customers and expanding into new geographies. We increased our portfolio of 400 plus bank sector projects by adding 39 new projects in 2024. Key collaborations with national banks included working with CITIC Private Banking, ICBC, China Merchants, Bank of China and Bank of Communications for airport transfers and travel services.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

On the regional bank front, we provided retail travel services to the Shanghai rural commercial bank, designated driver services for Mengsheng Bank and agricultural bank and car wash and smart outbound calling services in three provinces for CCB Dragon card and ICBC respectively. Our relationship with insurance customers is multifaceted. We sell an increasing amount of auto insurance for them while also being a supplier of auto services. Suncar has partnered with over 100 insurance branches, including the top 10 P and C branches of P and insurance and 20 plus branches of China Continent Insurance. We have broadened our service scope beyond traditional offerings to include limousine transfers and EV charging aligning with evolving customer and market demands.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

We will continue to leverage AI software and automation technologies to enhance operational efficiency, improve customer experience, and drive scalable growth. Regarding product development, we continue to build new features such as real time fleet delayed notifications, intelligent order reminders, and call quality monitoring. These new features also streamline workflows and elevate service quality across our platform. SunPower has established its ANGI AI Technology Service Center to further extend its technology leadership position. We are leveraging proprietary AI development capabilities to co develop products with our auto partners, which will increase the sales of new insurance policies, renewals, and extended warranties.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

Our development of AI enhanced customer engagement features, a shortened service response times, enhanced the cross selling of insurance and non insurance products and increased customer satisfaction. We have expanded our insurance product portfolio by building customized vehicle specific insurance products, which will now include loaner vehicles and repair subsidies for various sales channels. I'll now move to our financial report which is will be presented in US dollars. For the full year 2024, we are pleased to report total revenue of $441,900,000 up from 21.5% from $363,700,000 compared to the full year 2023. This growth underscores the value we are providing to our large partners in the auto insurance business, the strength of our new insurance products and our ability to meet the broad auto services needs of our enterprise customers.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

Auto insurance revenue increased 44.4 to $170,500,000 for the year ended 12/31/2024 compared to $118,100,000 for the year ended 12/31/2023. This growth was driven by the leverage from our strong partnerships with automakers and an increase in insurance policies sold in the twelve months ended 12/31/2024. Technology services revenue increased 46.4% to $44,900,000 for the year ended 12/31/2024, up from $30,700,000 in the prior year. This increase was driven by strong demand from insurance companies and their sales partners for our software and services. The company's ongoing upgrades to its technology stack and use of a private cloud platform have simplified development and enhanced service capacity enabling this rapid growth.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

Auto services revenue increased 5.3% to $226,500,000 for the year ended 12/31/2024, up from $215,000,000 for the year ended 12/31/2023. The increase was driven by the addition of 39 new bank sector customers and an increased number of completed service orders. Our operating costs and expenses increased to $500,300,000 for the year ended 12/31/2024 compared to $379,200,000 for the year ended 12/31/2023. Integrated service costs were $226,200,000 in 2024 from $209,600,000 in the previous year. These increases align with the growth in revenue from our auto services business and the significant expansion of our technology services business.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

Selling expenses were $22,600,000 in the year ended 12/31/2024 compared to $20,600,000 in the year ended 12/31/2023. This increase was mainly due to an increase in promotional expenses. General and administrative expenses increased from $22,500,000 in 2023 to $47,000,000 in 2024. This increase was primarily due to a $31,000,000 increase in share based compensation expenses related to the 2024 equity incentive plan and a $5,400,000 increase in expected credit losses on accounts receivable. Research and development expenses increased from $14,100,000 in the year ended 12/31/2023 to $40,200,000 in the year ended 12/31/2024.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

The primary driver of this increase was the million $31,000,000 share based compensation expense related to 2024 equity incentive plan, which was partially offset by a decrease of $4,900,000 in technology service fees due to reduction in purchases of external services. We continue to strategically invest in R and D and business development as we grow our business relationships with some of the largest enterprises in China. Adjusted EBITDA, a non GAAP metric that excludes certain non recurring items and non cash expenses such as the compensation expenses related to the 2024 equity incentive plan helps evaluate our operational performance in addition to the GAAP metrics. Our adjusted EBITDA increased by 492% to $9,800,000 for the year ended 12/31/2024 compared to $1,600,000 in the prior year period. We believe this measure provides useful information about our operating results by excluding certain expenses that may not be indicative of our core business operating results.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

Reconciliation of adjusted EBITDA to net loss, the most directly comparable GAAP measure is provided in our earnings releases and investor presentations available on the Investor Relations section of our website. To close, 2024 was a year of meaningful progress for Suncor as we advanced our auto partnerships and AI cloud enabled SaaS model. We have strengthened our recurring revenue base and positioned the company for sustained scalable growth. Subject to risks such as regulatory changes, market competition, we remain focused on expanding our technology footprint, broadening our software and service offerings and deepening the partnerships that fuel our success. The continued focus of our EV partners on enhancing the post sale customer journey provides a powerful long term tailwind for her business.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

For a detailed discussion of risks, please refer to our form 20 F filed on 04/28/2025. Our ability to deliver a personalized driver experience powered by AI and our cloud platform remains at the heart of our strategy and we believe will continue to drive value for our customers and shareholders. With that, we'll now begin the question and answer session.

Executive

So first question we have, what impact if any will U. S. Tariffs have on SunCars business? Business?

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

We don't currently expect U. S. Tariffs will have a material direct impact on Suncar's business as our business is 100% focused on China's domestic auto market. We continue to monitor indirect effects such as potential supply chain disruptions for our partners. The rapid adoption of EVs and the digitalization of China's entire domestic auto market remain the primary positive trends for Sun Car because we believe we are the leader in digitalizing this market.

Executive

Thank you. Our next question is, why have so many EV manufacturers been interested in partnering with SunCAR and using your technology?

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

Our team has been in the market for almost twenty years and understands the evolving needs of the EV companies very well. Additionally, Suncar has invested approximately $100,000,000 in its industry specific cloud, AI, mobile apps, and data infrastructure. This investment is paying off as we built a very differentiated solution in the market. As our EV partners focus on their customers post sale journey, they realize that SunCars insurance technology is the most mature and feature rich in the market.

Executive

How do you see your Tesla relationship evolving over time?

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

Tesla continues to be a strong partner in expanding our portfolio of insurance products and sharing our vision of delivering customized full featured services to each driver.

Executive

Thank you. Our next question is, what do you attribute the rapid growth of your insurance business to?

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

Differentiation is key. The competition among EV and gas vehicle manufacturers has grown incredibly tough. For this reason, they are looking at other ways to monetize customer relationships beyond just the vehicle sale. Our technology plays a key role in their digitalization strategy and enables additional downstream revenue opportunities through sales and service options for vehicle owners. We are working collaboratively with these manufacturers to add additional services.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

This information is consistent with our prior public disclosures regarding market trends and our business strategy.

Executive

Congratulations on your strong adjusted EBITDA growth. How do you view your profitability tracking over the next year?

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

Thank you. We're encouraged by our adjusted EBITDA growth and see the continued strong growth of our insurance business as a key contributor to this. Additionally, we are leveraging AI and other technologies to optimize our operations positively impacting profitability.

Executive

Thank you. How do you view AI impacting your business in 2025?

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

We've been using AI in our business for well over a year. Its impact on our business has been significant as our team is finding new ways to use AI to optimize our operations and add new product features. On the product development front, we plan to integrate AI into as many features as possible to optimize the driver's experience and accelerate our customers monetization efforts.

Executive

Thank you, bro. How impactful will gas vehicle customers be on your insurance business this year?

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

As you heard in our insurance segment review, we're making great progress in penetrating the gas vehicle market. SunPower executives have been the featured speakers two years in a row at the largest gas vehicle dealer industry conference. Customer wins at SAIC and Chang'an Deepal dealer group testified that the gas market is accelerating its adoption of digital solutions to drive downstream insurance and maintenance revenue. We have had gas vehicle dealerships successfully using our products for some time. What is more recent is the industry's economic pressures have dramatically increased demand for our solutions from gas vehicle dealers.

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

Their search for new revenue streams has reached a tipping point where they must digitalize to effectively capture as much downstream insurance and maintenance revenue as possible. Because the gas vehicle market is so much larger than the EV market in terms of existing vehicles, we think it can be very impactful to our business.

Executive

Our next question. What do you see as the future of your Angi AI technology services center?

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

We see Onge and our engineering and product development teams playing an increasingly important role in our business. As we further develop our AI and software development capabilities, the ING teams will play a critical role in innovating new insurance products. The ING center is key to working with our auto partners to co develop custom insurance solutions that meet each of their specific needs and objectives.

Executive

Thank you. What do you see as the most exciting aspect of your services business?

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

Clearly, the emergence of customers from new sectors such as retail and luxury offer new areas of growth for this segment. Additionally, there exists opportunities to explore additional synergies with our insurance business. We believe an increasing number of our EV company insurance customers will want to add our auto services module to their existing insurance and other driver software.

Executive

Thank you, bro. Next question, will you be issuing guidance this year?

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

We currently plan to issue guidance with our first quarter twenty twenty five earnings release, subject to market conditions and board approval.

Executive

Thank you. Our last question. Do you expect it will be another large employee stock compensation expense this year?

Breaux Walker
Breaux Walker
Chief Strategy Officer at SunCar Technology Group

No, we don't. Last year's employee stock compensation program was a one time event under the 2024 equity incentive plan to retain and reward a core group of long term Suncor employees who had been with the company for many years and who were critical to our growth. We do not expect to incur a similar expense in the near future.

Operator

We have reached the end of our question and answer session, which concludes today's conference. Thank you for your participation. You may disconnect your lines at this

Executives
    • Jennifer Jiang
      Jennifer Jiang
      IR Director
    • Zaichang Ye
      Zaichang Ye
      Chairman, Director and CEO
    • Breaux Walker
      Breaux Walker
      Chief Strategy Officer
Analysts
    • Executive
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Key Takeaways

  • Suncar achieved record revenue of $441.9 million in 2024, up 21.5% year-over-year, and drove a 492% increase in adjusted EBITDA to $9.8 million.
  • Partnerships with EV leaders like Tesla expanded from 6 to 48 cities, while new agreements with Xiaomi and SAIC Maxus position Suncar to capture growth in both EV and much larger gas-vehicle insurance markets.
  • A $100 million investment in proprietary cloud, AI and mobile apps—housed at the ANGI AI Technology Service Center—underpins new product innovations and operational efficiencies.
  • Operating expenses rose sharply in 2024, as G&A and R&D costs more than doubled due to a one-time $31 million share-based compensation charge under the 2024 equity incentive plan.
  • Suncar plans to issue full-year 2025 guidance with its Q1 earnings release, expects no similar large equity compensation events, and remains focused on digitalizing China’s auto insurance and services market.
AI Generated. May Contain Errors.
Earnings Conference Call
SunCar Technology Group H2 2024
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