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Presentation

Autohome Inc. misses on earnings expectations. Reported EPS is $0.4865 EPS, expectations were $0.49.

Operator: Ladies and gentlemen, thank you for standing by for Autohome’s First Quarter 2025 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference call is being recorded. If you have any objections, you may disconnect at this time. A live and archived webcast of this earnings conference call will also be available on Autohome’s IR website. It is now my pleasure to introduce your host, Sterling Song, Autohome’s IR Director. Mr. Song, please go ahead.

Sterling Song: Thank you, operator. Hello, everyone, and welcome to Autohome’s First Quarter 2025 Earnings Conference Call. Earlier today, Autohome distributed its earnings press release, which can be found on the company’s IR website at ir.autohome.com.cn. Joining me on today’s call are Chief Executive Officer, Mr. Song Yang, and Chief Financial Officer, Ms. Craig Yan Zeng. Management will go through their prepared remarks first, which will be followed by a Q&A session where they will be available to answer all your questions. Before we continue, please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. 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 U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange. Autohome doesn’t undertake any obligation to update any forward-looking statements, except as required under applicable laws. Please also note that Autohome’s earnings press release and this conference call include discussions of certain non-GAAP financial measures. The reconciliation of the non-GAAP measures to the most directly comparable GAAP measures can be found in our earnings release. I will now turn the call over to Autohome’s CEO, Mr. Yang, for opening remarks. Please go ahead, Mr. Yang.

Song Yang: Thank you, Sterling. Hello, everyone. This is Song Yang. Thank you for joining our earnings conference call today. In the first quarter, we concentrated on strengthening the fundamentals of our business and on enhancing our innovative initiatives. Leveraging on our solid foundation, we continued to drive breakthroughs in innovation, steadily advancing our online-to-offline integration strategy and achieving solid progress. In terms of building our foundation, we focused on expanding our product offerings and enhancing the user experience to deliver greater value and establish a solid base. On our content, we enriched our content portfolio by adding travel locks, camping, and other broader automotive-related content.

We also introduced a robot section on our ATP homepage, expanding into the smart technology space to meet our users’ diverse needs. On our user experience, we systematically promoted new card content through upgraded live streaming features to enhance the appeal of our professional content. We also launched the starting price tool, which consolidates government subsidies and OEM discounts, helping users make car buying decisions more easily and efficiently. Building on our solid fundamentals, we are actively driving technological innovation, continuously deepening the application of AI, and expanding our new retail business to establish engines for future growth. Currently, our AI technology has already been successfully implemented across our advertising, lease membership products in APP smart assistant, used car smart tools, and new media.

Notably, at the end of March, again, we upgraded the Autohome APP with an AI smart assistant powered by DeepSeek and our own proprietary big data resources. This feature significantly enhances the user Q&A experience in the automotive vertical and efficiently improves efficiency in user decision-making. Meanwhile, our new retail business is steadily expanding.To date, we have nearly 200 Autohome space and satellite franchise stores in operation, providing local partners with cutting-edge technological capabilities, premium offline resources, and robust ecosystem support to drive mutual growth. In addition, through our participation in the auto show in Thailand, we are also actively exploring ways to support Chinese automakers in expanding overseas markets.

Autohome began as automotive media and has evolved far beyond. In the two decades since our establishment, we’ve accumulated a massive amount of industry data, abundant industry expertise, a large and strong user base, and extensive brand recognition.Today, as the Chinese auto market undergoes profound structural changes, we’ve built a data-driven intelligent service platform across new retail, smart technologies, and a broader automotive ecosystem, driving a comprehensive upgrade to the automotive consumer experience. Looking ahead, we remain committed on user needs, continue to strengthen our foundations, actively explore new emerging sectors, and build a fully integrated online-to-offline ecosystem for services, providing consumers and clients a more comprehensive and convenient one-stop service.

With that, I will now turn the call over to our Chief Financial Officer, Ms. Craig Yan Zeng, for a closer look at our first quarter 2025 operating and financial results.

Craig Zeng: Thank you, Mr. Yang. Hello, everyone. I’m Craig Zeng, the CFO of Autohome. In the first quarter, we focused on key new car launches and upgraded the live streaming of our professional content. By live streaming new car debuts, initial showcasing, and initial test drives, we improved the timeliness and reach of professional content, creating an immersive consumer experience. For example, our new car express news program organized and customized live streaming of new car launches, attracting more than 200,000 interactions collectively. The related topic also sparked user-generated content and secondary distribution across multiple third-party platforms, extending the reach of our professional content beyond the traditional audience.

Today, we have achieved full live streaming coverage for all S-class new car launches. In addition to our professional partners, we also introduced a variety of programs such as Motor Enthusiast and Grand Tour, creating interactive platforms for car owners to share and connect over their driving experiences, and marking an expansion of our content coverage from specialized automotive topics to broader car lifestyle and culture. This also integrates the future trends of smart technology into our content, forming a diversified and multidimensional content ecosystem. According to QuestMobile, our average mobile DAUs reached 76.92 million in March 2025, up 10.8% from the same period last year, reflecting our sustained growth in user scale and expanding platform influence.

Turning to NEVs. Our new retail business introduced the Bui service model that integrates online and offline services. With a focus on the user, this model combines expert recommendations, real-time vehicle demonstrations via live streaming, instant communication through enterprise WeChat, transparent online pricing, and multi-vehicle test drives by real car owners. By connecting every stage of the buying process, we offer users a one-stop car purchase experience across multiple brands, making the progress easier and more cost-effective. Currently, we’ve established 29 Autohome Space stores and 170 franchised satellite stores nationwide. Forming strong offline networks, enabling more users to experience the professionalism and convenience of our services.

In the first quarter, total revenues from NEVs, including those from our new retail business, increased by 72.6% year-over-year. On the digital front, we are advancing the comprehensive AI upgrade of our products powered by DS. Specifically in marketing, we have transitioned from the traditional manual design and rule-based approaches to an AI native and data-driven intelligent [indiscernible]. Leveraging Generative AI, we’ve rebuilt our end-to-end marketing system to deliver more precise and efficient services. For membership products, we deeply integrated DS6 open source architecture to continuously enhance AI capabilities, utilize AI-enabled task reduction, follow-up optimization, and decision support, providing more intelligent operational assistance to our business partners.

Our AIGC-powered new media marketing connects content-based and live streaming-based channels to acquire consumers, significantly improving store operational efficiency and helping merchants achieve higher-quality traffic conversion. In addition, to address the complexities of nonstandard used car transactions, we launched the used car AI smart buyer in April, which refines the labeling of nonstandard product tags and analyzes user needs to effectively solve problems such as poor transaction matches and car selection difficulties. In the first quarter, the revenues from data products increased by over 5% year-over-year. We will continue to deepen the application of AI across multiple scenarios to better address user demand and drive business model innovation and efficiency.

In our used car business, we are building a collaborative O2O ecosystem around the used car transaction chain. Online, we established a cross-platform coordination mechanism between Autohome and TTP to optimize resource allocation and ensure a consistent user experience. Offline, we collaborate with TTP dealers and Autohome space stores to expand premium inventory sourcing and implement refined layered management of used car resources based on vehicle condition, pricing, and other factors to accurately match inventory with different dealers’ capabilities, creating a highly efficient used car sourcing platform. In summary, we’ve been vigorously implementing a new strategy for the integrated development of O2O operations and continuously advancing execution.

In this process, we’ve been constantly strengthening our business foundation and cultivating new growth drivers. We are striving to transform from a pure automotive media vertical into a comprehensive auto lifestyle ecosystem, one that is much closer to the transaction and enhance the global automotive consumers’ ownership experience. This evolution will allow us to deliver superior products and services to users and clients and create long-term value for our shareholders. With that, please let me briefly walk you through the key financials for the first quarter 2025. Please note that I will reference RMB only in my discussion today unless otherwise stated. Net revenues for the first quarter were RMB 1.45 billion. Breaking it down, media services revenues were RMB 242 million.

Lead generation services revenues were RMB 645 million and online marketplace and others revenues were RMB 566 million, up 2% year-over-year. Cost of revenues in the first quarter was RMB 316 million compared to RMB 301 million in the corresponding period last year. Gross margin in the first quarter was 78.3% compared to 81.3% during the first quarter last year. Overall, we delivered an operating profit of RMB 233 million in the first quarter compared to RMB 276 million for the same period of last year. Adjusted net income attributable to Autohome wasRMB421 million in the first quarter compared to RMB 494 million in the corresponding period of 2024. Non-GAAP basic and diluted earnings per share in the first quarter were both RMB 0.88 compared to RMB 1.02 in the corresponding period of 2024.

Non-GAAP basis earnings for ADS in the first quarter were RMB 3.54 and RMB 3.52, respectively, compared to RMB 4.08 and RMB 4.07, respectively, in the corresponding period of 2024. As of March 31, 2025, our balance sheet remains robust with cash, cash equivalents, and short-term investments of RMB 21.93 billion. We generated net operating cash flow of RMB 135 million in the first quarter. On September 4, 2024, our Board of Directors authorized a new share repurchase program under which we are committed to repurchase up to USD 200 million of Autohome’s ADS for a period not to exceed 12 months thereafter. As of May 2, 2025, we repurchased approximately 4.78 million ADS for a total cost of approximately USD 128 million. So the above is our financial summary.

With that, we are ready to open up the Q&A session. Operator?

Operator: [Operator Instructions] Our first question comes from the line of Thomas Chong from Jefferies.

Thomas Chong: My first question is about the auto industry. We see the sector is performing well in Q1. What’s the implication to the sector and Autohome? What’s management’s expectation about the 2025 industry outlook? And my second question is about Retail. Can management comment about the progress so far and our plan going forward?

Song Yang: Thank you for your question. I am Song Yang. Let me answer your question. First, let me analyze the characteristics of the market for Q1. First, the overall new car sales grew, but with new energy vehicles, that is NEV, standing out, although their growth rate has slowed. According to official data, Q1’s auto sales increased by 6% year-on-year. Among this, internal combustion engine vehicle sales, that is, ICE vehicle sales, continued to decline, down 12% year-on-year, while NEV sales grew by 36% year-on-year. However, this is slower than the growth rate of over 40% seen in the second half of last year. At the same time, we’ve observed a clear trend of growth in volume but decline in profits. In Q1, the average profit margin of China’s auto industry was only 3.9%, significantly lower than the 5.6% average for downstream industrial enterprises, reflecting continued margin pressure in the auto sector.

Second, 2 new policies have helped revise the market and stimulate car buying demand. In January, the National Development and Reform Commission and the Ministry of Finance released a notice on promoting consumption and the trade-in of consumer goods. Regarding the auto sector, it’s proposed expanding support for scrapping and replacing old vehicles and improving subsidy standards for car trade-ins. According to the estimates from the China Automobile Dealers Association, after the scrappage standards were broadened, over 10 million additional National IV standard passenger vehicles became eligible, and the number of eligible NEVs increased by more than 1 million. Third, the price war has cooled while competition in intelligent vehicle technology has intensified.

Automakers are now racing into the smart tech track, not only meeting consumer demand for intelligent experiences but also helping manufacturers overcome the challenges of technological homogenization amid fierce market competition. Looking ahead to the 2025 auto market, we see the following trends: First, ongoing structural adjustments in the market with NEVs becoming the main growth driver. Second, continued policy support leading to steady modest growth. Third, automakers accelerating their shift toward intelligent transformation. For Autohome, we will continue to focus on user demand, improving user experience, and enhancing our service capabilities.For one thing, we are developing intelligent professional tools such as the starting price tool and our AI assistant to help users understand regional differences in vehicle discount policies.

The other thing is that we are aligning — we are capitalizing the broader structural changes in the auto market by expanding our new retail network. We are building nearly 200 space stores and satellite stores nationwide. At these space stores, we’ve introduced the innovative Buy Car for You O2O service model, addressing user pain points throughout the entire car buying journey. from browsing and selecting to purchasing and trading in. We are also working to integrate the NEV service chain and provide users with high-quality, convenient, and one-stop services. With the continued growth of the NEV market, the improvement of our channel network, and the ongoing evolution of our business model, we believe our new retail business will become a new engine driving Autohome’s future growth.

Now let me answer your second question. So first, about our store opening progress. As of the end of the first quarter this year, we have established 29 space stores and 170 franchise satellite stores across the country. These stores cover both major cities and lower-tier markets, enabling more users to experience Autohome’s professional and convenience services. The second point is about our space store upgrades. Since Autohome first launched its offline retail strategy in September 2022, we have undergone more than 2 years of hands-on exploration and continuous iteration of our new retail model. At the recent Shanghai Auto Show, the newly upgraded Autohome Shanghai Space store was unveiled at the Shanghai World Expo site. It features cutting-edge technologies, including a glasses-free 3D holographic cabin, Dolby Sound, and an AI smart purchase assistant, enabling users to enjoy an immersive car selection experience and generate personalized purchase plans in real time.

We will rapidly roll out these space stores upgrades nationwide to deliver an even better car-buying experience for our users. The third point is about our expansion plan. In 2025, we plan to aggressively expand our offline new retail presence. By the end of this year, we aim to exceed 500 total locations, combining our space stores and satellite stores. The expansion will focus on lower-tier and rural markets. And over the next 3 years, we intend to extend our reach to cover the vast majority of prefecture-level cities, counties, and rural areas across China. This will allow more consumers to access auto home services, accelerate the adoption of new energy vehicles, and support the broader transformation and upgrade of the automotive industry.

Operator: Our next question comes from the line of Brian Gong from Citi.

Brian Gong: I have two questions. First one is what’s the latest status of Haier’s acquisition, and once the deal can be completed. In the future, what new development strategies for Autohome to apply? And the second question is, when will OEMs’ pricing to stabilize in management’s view? And does the impact from [indiscernible] dealers to our lead generation business just emerge?

Song Yang: Thank you, Brian, for your question. On February 20, Haier Group announced that its subsidiary, Cartech had acquired a 41.91% stake in Autohome. As of now, the equity transfer has not yet been completed, and the transaction is still under regulatory approval. We will share any updates with our shareholders first up to date. So as the transaction is yet to be completed, we could only disclose public information and opinions. So all in all, we believe that we will be committed to the online to offline new retail model and also the development trend in new energy vehicles and intelligent development strategy. So according to the press release by theHaierGroup, we will be committed to continue strengthening Autohome’s O2O intelligent exchange capability and the Ping An Group will remain our important shareholder.

We will also continue to strengthen our partnership with Ping An Propertyand Casualty Insurance. So as for your second question about when the auto price war is expected to stabilize and also the impacts of dealership closures, whether they are beginning to emerge, we believe that the price war is expected to continue in the short run. And just now, we’ve heard from CEO Yang that now we are seeing a trend of growth in volume while decline in profits. And also, we can see that from the financial reports of automakers that are listed, their profits has been affected. However, we believe that the room for further price decline is limited. And we believe that after the current inventory clearance and also the end of the subsidy policy transition, the competition will gradually cool and ease.

Also, we are seeing a major impact on the dealers caused by the price war, especially in terms of their financial reports last year, we are seeing the decline in profits across most of the dealers. And we believe that currently, the dealers, the biggest challenge faced by dealers is the need to transform. And we are seeing an apparent decline in the sales of ICE vehicles and the 4S model that used to be popular is also facing severe challenges. So currently, we need to address the challenge of declining ICE auto sales, and they also need to think about how to better sell NEVs. Of course, we are seeing a lot of efforts on their part. And our new retail business also aims to help them improve their sales with greater efficiency. So in the long run, we believe that the dealers would pivot towards the business of new energy vehicles and also towards greater efficiency and costs.

Of course, we see news of dealers exiting the market. However, we believe that the base number is still stable. So in the future, with restructuring of the businesses and greater innovation, we believe that leading dealers and those who are able to transform relatively rapidly would still have the potential to hold still in the market. And we believe the market would return to a healthy track after temporary adjustments.

Operator: Our next question comes from the line of Xiaodan Zhang from CICC.

Xiaodan Zhang: So could management update the strategy for the new retail model as well as its expansion pace for the subsequent quarters? And also, any update on the shareholder return plans?

Craig Zeng: So as CEO Yang mentioned earlier, our new retail business has been constantly evolving. So it started from version 1.0, which focused on launching space stores in major cities, and then we had version 2.0, where we introduced a satellite plant and we built a plus and marketing network, extending from core cities to surrounding regional markets. And now we are up to the stage of version 3.0, where we focus on enhancing the car buyers’ experience and reducing transaction costs for both buyers and sellers through technology and service upgrades. So our new retail strategy has been consistently upgraded in line with market dynamics. Our first store in Shanghai underwent a comprehensive upgrade in Q1 this year. In addition to existing services, it now features an immersive VR camera experience and an on-demand AI smart purchase assistant, making the car buying journey even more intelligent.

The AI smart purchase assistant can match vehicle models to a customer’s budget, lifestyle demand, and preferences, cutting information search time by 90%, lowering decision-making costs, and improving purchase, overall purchase efficiency, delivering a time-saving car search and cost-saving car purchase. As mentioned by CEO Yang, by the end of this year, Autohome aims to operate 50 space stores and 500 satellite stores, offering car buying services to nearly all prefecture-level cities and counties in China. Over the next 3 years, we plan to open 1,000 satellite stores. With this rapid scale-up, our new retail business is expected to become a greater contributor to Autohome’s overall revenue. So as for the shareholder return plan, about the dividends, our general plan is to maintain consistent and stable in terms of our shareholder return.

We will continue to honor our previous commitments to the market that is this year’s dividend payout will be no less than RMB 1.5 billion. And about our share repurchase, in September 2024, the Board approved a $200 million share repurchase program. And as mentioned by CEO Yang, as of now, we have already executed approximately $130 million repurchasing that is nearly 5 million ADS. So taking both the dividends and share repurchases into account, our annual shareholder return rate has exceeded 10%. Looking ahead, we will continue to reward shareholders through consistent and stable dividend and repurchase policies, aiming to increase long-term and stable returns for our investors.

Operator: Our next question comes from the line of Ritchie Sun from HSBC.

Ritchie Sun: I would like to ask how would you think about the impact of trade tensions towards the car market and our business?

Craig Zeng: So, we believe the trade war will have some impact on China’s auto market. There would be price fluctuations because with the U.S. imposing higher tariffs, American auto brands such as Tesla, Lincoln, Chevrolet and Hummer are expected to rise. However, we believe that currently, the domestic auto market is largely driven by the growth of new energy vehicles, and we are also seeing very high market share from brands of Europe and Japan, while the proportion — while the share of U.S. brands is relatively limited. So, we believe the impact on the overall Chinese auto market will also be limited. So just to clarify, by U.S. brand, I mean imported U.S. auto. So, for Autohome, because our main businesses are focused on the domestic market, so there may be some impact on the macro level, but the direct impact is very limited on Autohome.

Operator: There are no further questions at this time. I will turn the conference back to management for closing comments.

Song Yang: Thank you, everyone. Thank you very much for joining us today. We appreciate your support, and we look forward to updating you on our next quarter’s conference call in a few months’ time. And in the meantime, please contact us if you have any further questions or comments. Thank you very much. Thank you.