Ladies and gentlemen, thank you for standing by and welcome to the Uxin Limited Fourth Quarter and Fiscal Year 2024 Earnings Conference Call. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I would now like to introduce your host for today's call, Mr. Jack Wang. Please go ahead, Jack.

All right. Thank you, Operator. Hello, everyone. Welcome to Uxin's Earnings Conference Call for the Fourth Quarter and Full Fiscal Year ended March 31st, 2024. On the call with me today, we have D.K., our Founder and CEO; as well as John Lin, our CFO. D.K. will review business operations and company highlights, followed by John, who will discuss financials and guidance. They will both be available to answer questions during the Q&A session that follows. 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. And now with that, I will turn the call over to our CEO, D.K. Please go ahead, sir.

Hello, everyone. Thank you for your ongoing interest and support. It’s great to have you with us for today’s earnings call. To effectively communicate with both our domestic and international investors, I will discuss our performance over the past fiscal year and share insights into our future prospects in both Chinese and English. The current economic environment in China is transitioning into a new developmental phase, presenting several challenges across various sectors, including the used car market. Notably, the competitive pricing strategies employed by car manufacturers early last year have significantly impacted the price structure of the used car market, resulting in a considerable decrease in profitability within the industry. Nonetheless, we are encouraged by the opportunities arising from these challenges. Over the last year, China’s used car market has continued to experience rapid growth, with national transactions exceeding 18 million units in 2023, marking a nearly 15% increase year-over-year. The government's supportive policies aimed at promoting the used car industry, alongside significant incentives for trading in old cars for new ones, have fostered consumption growth in the sector. In our increasingly complex and dynamic operating environment, resources are beginning to shift towards leading used car dealers, offering long-term sustainable growth and profitability prospects for companies that are adept in scale, branding, and efficiency. Uxin’s distinctive business model, highlighted by our flagship used car superstores, has shown strong competitive advantages across several areas, gaining traction in the cities where our superstores are located. Over the four quarters of fiscal year 2024, our retail sales continued to rise, with a total of 10,179 units sold throughout the year. From January to March 2024, even during the traditionally slow spring festival season, we recorded retail sales of 3,124 units, a 38% increase compared to the same period last year. Our superstores have emerged as the leading brand in their areas, achieving a net promoter score consistently around 60 points for ten consecutive quarters, the highest level in the industry, with a regional market share of 10% and increasing. Our overall vehicle inventory turnover stands at around 30 days, and our streamlined, standardized, and digitized operating system has matured over the past year, significantly exceeding the industry average in terms of operational capacity and efficiency. Reflecting on the past year, we have made considerable advancements across many aspects of our business, positioning us favorably for scalable profitability. I would like to emphasize three key achievements. First, our branding and sales capabilities have created a positive flywheel effect, further enhancing sales efficiency. By engaging with customers through superior products and services, we have developed a stronger network effect in regional markets as customer trust and reputation have grown, leading to improved sales conversion rates. Consequently, our in-store customer conversion rate has reached approximately 40%. Despite the fierce competition in the industry, our retail vehicle inventory turnover rate has improved by over 60% compared to the previous fiscal year, enabling us to achieve higher retail sales with the same inventory size. Uxin's extensive industry experience has significantly empowered our sales strategies through digitization. Our AI pricing model actively monitors hundreds of thousands of used car data points online, creating competitive price models based on various factors such as car model, age, condition, and mileage. This system, combined with customer viewing records and offline test drives, can swiftly generate purchase and sale prices while adjusting them promptly to keep Uxin's vehicles highly competitive in the market. During the recent new car price reductions, our pricing system quickly adapted to modify the acquisition and selling prices of similar models, facilitating the faster sale of affected inventory. By adjusting our prices swiftly, we can accelerate vehicle sales, lessen the impact of new car price cuts, and transition into the next regular sales cycle more promptly. Second, while increasing our sales volume, we have also improved our gross profit per vehicle. Our gross profit margin has risen from 1.2% in fiscal year 2023 to 5.9% in fiscal year 2024. In the used car sector, prices generally decline as inventory ages, so by accelerating our sales turnover, we have naturally increased our gross profit per vehicle. Additionally, by leveraging our one-stop shopping experience at offline superstores and reconditioning facilities, we have continually expanded our high-margin value-added services, such as financing, insurance, extended warranties, premium accessories, and maintenance. Over the past year, the uptake of these services has rapidly increased, enhancing our gross profit margin. Furthermore, our per-vehicle reconditioning costs have significantly reduced. Uxin's transparent factory is now fully operational, with vehicles taking only about three days to move from warehousing to sales, allowing for quicker sales entry. Through bulk procurement of parts, SMART repairs, and the application of 3D printing technology, our reconditioning costs per vehicle in fiscal year 2024 decreased by 50% compared to the previous year. Third, we have consistently worked to cut costs, boost efficiency, and optimize our operating expenses. Our adjusted EBITDA for fiscal year 2024 showed a loss of RMB 176 million, representing a nearly 40% reduction in losses compared to fiscal year 2023. This year, we implemented several measures to reduce costs and enhance efficiency. Looking ahead, we expect fixed costs and expenses for fiscal year 2025 to decline by over RMB 100 million compared to fiscal year 2024, which will lead to quicker overall adjusted EBITDA profitability at the company level. For instance, in marketing, we developed a highly effective customer acquisition strategy, decreasing advertising and promotion costs by more than 50% compared to last year. Utilizing our expansive venues, we actively engaged in community-based marketing by organizing events like sports meetings, anime conventions, job fairs, and vehicle test drives. These activities have increased our regional market visibility, driving substantial organic traffic and significantly lowering customer acquisition expenses. In the previous year, our offline superstore model has proven successful, placing Uxin on a rapid growth pathway. As we look forward to the new fiscal year, we have established three main business objectives that align with our current development plan. First, we plan to significantly increase our sales volume, targeting a year-over-year retail sales growth of 150% for fiscal year 2025. We are confident in maintaining our current sales efficiency and will gradually increase our inventory, expecting it to rise two to three times compared to the start of the fiscal year, which will fuel continuous retail sales growth in the upcoming quarters and help us meet our sales targets. Second, we aim to achieve profitability at scale across the company. Our goal is to reach positive adjusted EBITDA for the entire company between October and December 2024. With new car prices stabilizing, used car profitability is starting to rebound, and as our inventory and sales continue to grow, we are optimistic about achieving this profitability target. Third, we will finalize the site selection and operational arrangements for two to three new superstores, strengthening our integrated online and offline superstore network. Recently, we announced a strategic partnership with the Zhengzhou Airport District government, with a joint investment of RMB 170 million to establish a new Uxin used car superstore in Zhengzhou city. As a transportation hub in Central China and one of the most active cities for used car transactions, Zhengzhou has over 13 million residents and 5 million cars, making it an ideal site for a large-scale used car superstore. In addition to Zhengzhou, we are progressing with implementation plans in several other cities, which will propel Uxin's national growth and business expansion in the coming years. Everything is in place for us to achieve our goals. We are confident in the competitive edge of Uxin’s superstore model and the momentum supporting our business growth. We remain committed to leading the transformation and advancement of China’s used car industry through a strong focus on customer-centric value creation. Thank you once again for your ongoing trust and support. We look forward to achieving new milestones together in the upcoming fiscal year. Now, I would like to hand over the call to our CFO to discuss the financial results. John, please continue.

Thank you, D.K., and hello, everyone. I will provide a closer look at our financial results from the fourth quarter and fiscal year 2024. To facilitate communication with both domestic and international investors on the call, I will make my remarks in both Chinese and English. As we review our performance in the fourth quarter of fiscal year 2024, which ended March 31, 2024, we faced the traditional off-season for used car sales due to the Chinese New Year. Nevertheless, the enhancement of our brand strength, as well as product and service quality, enabled us to deliver remarkable sales results with a total retail transaction volume of 3,124 units, a 38% increase compared to the same period last year. The total retail revenue for the fourth quarter was RMB 269 million, representing a 2% year-over-year increase. Despite certain challenges in the current domestic economic landscape and the ongoing intense price competition among domestic carmakers, we proactively adjusted our inventory structure to adapt to market changes. The average selling price, or ASPs, of our retail vehicles decreased from RMB 117,000 in the same period last year to RMB 86,000 this quarter. However, the significant change in sales volume offset the impact of the price reduction. Our wholesale transaction volume in the fourth quarter decreased by 31% year-over-year to 934 units, leading to a total wholesale revenue of RMB 39.7 million. With our offline superstore model not fully operational, we are focusing more on the retail vehicle business, and the proportion of wholesale business will naturally decrease over time. As such, our total revenues in the fourth quarter were RMB 319 million and importantly, our turnover efficiency has reached a new height amidst increasing market fluctuations, with the overall inventory turnover decreasing from 45 days at the beginning of the fiscal year to approximately 30 days currently. Faster vehicle turnover has allowed us to achieve higher net vehicle income. Additionally, the penetration rate of value-added services has been steadily increasing, driving the gross profit margin for the quarter up to 6.6%, compared to 4.8% in the previous quarter and 2.3% in the same period last year, and we anticipate further growth in our gross profit margin. We also further enhanced our operational efficiency and maintained strict cost control measures. As part of this ongoing effort, we have completed organizational adjustments and structural optimizations in March. In the first quarter, our adjusted EBITDA loss was RMB 39.7 million, a reduction of RMB 4.1 million compared to the previous quarter. Regarding the full fiscal year 2024 performance, our total retail transaction volume totaled 10,179 units and despite the impact of the new car price wars, we maintained continuous sales growth across all four quarters, achieving a retail revenue of RMB 1.02 billion and total revenues of RMB 1.38 billion. Our offline superstore business model is now fully operational, enabling us to narrow our adjusted EBITDA loss by RMB 104 million, nearly 40% from the previous fiscal year to RMB 176 million. Detailed information on our financial results from the fiscal year can be found in our recently released earnings report and annual report, so I won't repeat them here. In January 2024, we achieved adjusted EBITDA profitability at a superstore level for the first time. With new car prices stabilizing, we have already begun gradually increasing inventory levels. Meanwhile, maintaining our current vehicle turnover efficiency will drive sustained sales growth. Additionally, we expect fixed costs and expenses for the fiscal year of 2025 to be reduced by over RMB 100 million compared to the fiscal year of 2024, accelerating the achievement of company-wide adjusted EBITDA profitability. Moving on to the outlook for the first quarter of fiscal year 2025, which ended June 30, 2024, we expect our retail transaction volume to reach 4,000 units, representing a sequential increase of over 25%. Wholesale transaction volume is expected to be 1,500 units. Total revenues are projected to be between RMB 390 million and RMB 410 million. We also anticipate that our gross profit will remain stable compared to the fourth quarter of fiscal year 2024. As for the full fiscal year of 2025, we project a retail transaction volume of around 25,000 units, representing a year-over-year increase of 150%. Our goal is to achieve company-wide adjusted EBITDA profitability starting from the third quarter of the fiscal year, which is from October to December in 2024. And that concludes our prepared remarks for today. Operator, we are now ready to take questions.

And your first question will come from Fei Dai with TF Securities.

We noticed that the company recently entered a strategic cooperation with Zhengzhou worth RMB 170 million. Can you elaborate on this cooperation and how long it will take for the new superstore to achieve profitability? Additionally, what is the company's strategy for selecting new cities for expansion? And are there any other cities currently in progress?

This is D.K. I will address that question. You're correct. We have recently signed a contract with the Zhengzhou city government, and the local government plans to provide substantial support for our used car business in the area. In addition to the joint investment of RMB 170 million for our Zhengzhou superstore operation, the government also plans to invest an additional RMB 500 million in constructing the superstore site. The government will also offer industry subsidies, facilities and various other support to ensure that our project in Zhengzhou can commence as soon as possible. The construction of the store will take some time and is expected to be completed next year. Our offline superstore models in Xi'an and Hefei are running smoothly, and we anticipate that the new superstore will take approximately 12 months or less from commencement to achieving EBITDA profitability. So when choosing new areas for expansion, we prioritize cities with large vehicle ownership, high activities in used car transactions, and superior traffic conditions. For example, Zhengzhou is a transportation hub in Central China and one of the most active cities for used car transactions, with over 13 million residents and a vehicle ownership of 5 million, making it an ideal location for a new superstore. We also consider specific city conditions such as available land plots, and whether government support aligns with our needs for expanding new superstores. Given the backdrop of policies encouraging the development of the auto after-market, local governments are very supportive of our offline superstore model. We are currently in negotiations with multiple cities and expect to finalize cooperation with 1 to 2 cities within this year, so please do stay tuned for our further announcement on this front. And that's our answer to the first question.

We have a question from Water Tower Research, who couldn't attend in person. The question is about the development of our used new energy vehicle business and what percentage of Uxin's inventory they represent. Additionally, are there significant differences in profitability and cost when selling used new energy vehicles compared to fuel-powered used cars?

The growth rate of NEV sales in China this year has indeed been very impressive with their market share in new car sales now approaching 50%. We're keeping a close eye on this trend, and since the NEV boom only started in the last 2 to 3 years, their total ownership is only about 25 million, which is less than 10% of the national vehicle ownership of 340 million. Most NEVs haven't yet entered the used car sales space yet, so currently the proportion of our NEV sales is between 10% to 15%, which is still above market level. From our experience, the profitability of used NEVs is slightly higher than that of fuel-powered used cars. Firstly, used NEVs offer excellent value for money and due to their shorter update cycle and some characteristics similar to electronic consumer goods, their sales turnover rate is higher than that of fueled cars, leading to higher price markups. Additionally, since NEVs generally have a shorter average age, their condition and battery status are relatively better, and they do not involve issues with engines and transmissions, resulting in lower average reconditioning costs compared to fuel-powered cars. From our perspective as a professional used car retailer, there is no significant difference in the fundamental operations between used NEVs and fuel-powered cars. Our operational system fully supports the acquisition, reconditioning, sales and after-sales services for used NEVs. We've built a database of NEVs as well, including brands like Tesla, BYD, NIO, XPEV and Li Auto, and have invested in price monitoring, value retention systems and battery assessment equipment. We're also working with the National Big Data Alliance for New-Energy Vehicles, core suppliers in the supply chain, and vehicle manufacturers to promote a series of technical and informational collaborations to prepare for the used NEV business. We believe that with the rapid development of NEVs in China, the proportion of NEVs in our retail business will continue to increase, and we're fully prepared to capture that opportunity. And that's our answer to the second question.

Operator, let’s see if we have any other questions.

And this concludes our question and answer session for today. I would now like to hand the call back to management for any closing remarks. Please go ahead.

All right. Thank you again for joining today’s call and for your continued support in Uxin. We look forward to speaking with you again in the future. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.