YMM - Earnings call 3 2023 | Full Truck Alliance Co. Ltd.

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Operator

Ladies and gentlemen, good day, and welcome to Full Truck Alliance's Third Quarter 2023 Earnings Conference Call. Today's conference is being recorded.At this time, I would like to turn the conference over to Mao Mao, Head of Investor Relations.

Mao Mao

Thank you, operator. Please note that today's discussion will contain forward-looking statements relating to the company's future performance, which are intended to qualify for the Safe Harbor from liability, as established by the U.S. Private Securities Litigation Reform Act. company's guarantees and performance factors.Some materially uncertainties, risks beyond not to are of from are cause are risks could today's certain assumptions the and those statements mentioned of to press and future subject these actual in Such results and release differ discussion. control and other the general of the filings FTA's results financial and in discussion risk certain affect A is the of SEC. with company business factors that included could obligation certain to required purposes any this measures The forward-looking call, as company undertake does comparison except update by management information, not for only. will non-GAAP today's law.During also discuss financial

For results, will call today call CEO; from a our reconciliation financial please a see Mr. and FTA's senior the CFO. Cai, a on Management the management issued prepared will non-GAAP and Zhang, conclude and definition with us Chairman financial are session. our earnings Founder, measures today.Joining and non-GAAP of the GAAP Q&A Hui Simon remarks, to release begin with Mr. of earlier

reminder, As is recorded. being conference this a

Chairman available CEO, webcast call a be call over will turn website FTA's our will Investor this Relations to Founder, conference addition, replay at Zhang. the of Mr. ir.fulltruckalliance.com.I In on now and

Hui Zhang

fast, road us joining decade and XXX has the the witnessed XXXX and and more cargo a truckers.We XXX,XXX robust to types second half for improved industry. for among routes, of and logistics shippers This over competitiveness launch. gaining migration, through effect from shipping intelligentization, [Indiscernible] products anniversary tens as mode. Centered with around transportation small strive formed you nationwide provide from XX money, highly China's a its has user empower scratch And gradually digitalization enterprises a on trust call. the receiving value of of of in leader and the shipping platform Thank services Entering the locations have This everyone. millions and a third XXX in of transformation online country our now network through cities our enterprises of our core offline quality categories. plentiful, we for industrials we and our and than competitive in consumer third to quarter industry, million update progress value XXXX, over an will me China.Let continuously on our today the conference across in covers of logistics [Interpreted]Hello, started one-stop and quarter. building earnings and with the the of XXth medium-sized digital greater proposition

X we the have scale, improved ecosystem During and platform operations, steadily of user in quarter, product, experience. key supply areas; user truckers,

Notably, we active drove scales, which reached product and to scale orders. shippers volume.Turning shippers, operation. the order XX% a by X.XX continue XX% total number year-over-year the in of user have regarding member fulfilled XX% volume truck shippers a of and for increase, to accounting with of increase million members order increase XXX XX% year-over-year year-over-year First, monthly from growing

their addressing model, by has improved attracted services. to pricing fulfillment product needs shipment shippers entrusted direct new niche a for effectively Our refine users and

the are addition on enterprise supply. launch We working on to the also professional of truckers targeting shippers.Moving an

services transportation capacity trucker their system, order to matching supply and fulfillment an enabling further capability share enhanced truckers fulfillment leading rating and We tiered have have gain. truckers and supply strengthen efficiency. to transportation significantly optimized our enhanced improve eventually expanded support, Adequate

platform as quarter.Looking the services, in brokerage for functionality experience. transactions, well in volume value-added trucker logistics for user we one-stop the to allows contributed user members.Lastly, credit solutions services, and shippers higher penetration prepriced to ecosystem the both a order prepriced upgrades, including For price in increased which such goal insurance to respond stickiness without with an as entrusted order user instance, we the postings establishing value shipments transaction have our continue our free the at addition overall of and tap-and-go product than and volume witnessed order directly third to the grow to negotiation of and platform, faster truckers turn as a highly

highlights. We solve the bottom-line, in our shippers satisfaction.Moving record-setting we therefore, customer and quarter quarter, user to end-to-end by our of problems, truckers XX/X center streamlined service and to user user driven addressing This our expanded provide both business service, top-line delivered upgraded providing queries. have the ] helping user access, process efficient genuinely footprint. on and services, Through improving another simplified financial [ our further collecting prominently we feedback,

XX.X% year-over-year quarter RMB third expectations. non-GAAP reached billion XXX and net to Our year-over-year, revenues up RMB both million, market grew X.XX XX.X% surpassing adjusted income by

the economy our forward, industry to economy scale expand as value logistics continue fourth a ahead our mix and the series real the of optimize creating private and backbone going gained to revenue monetization we chain. importance of the of of the increasing support we As policy within elevate supplementing for has policies shareholders.Looking a development the expanding government has revenue and will where introduced more supporting process the our strengthening, efficiency, quarter,

macro With growth and revenue we achieving confident scale. the order ongoing tailwind, sustained are in in volume

and we convenient users innovation continue greater free. value and as hassle invest logistics will efficient, solutions make We experience to create more logistics in dedicated user intelligent providing to our for technological to

with to all.Thank determined drive progress benefits that partners, open are across an the wider everyone. you, ecosystem industry We our fostering in collaboration

provide call our quarter Let to over an results. progress me business on pass will CFO, update and financial third our who Simon, the

Chong Cai

I before earnings the time with XXXX and operational quarter highlights of record-setting Mr. the of our to for financial you, our call everyone brief then financial our many overview provide improvements. a for Thank results delivered and third session.We Zhang, and with another making today. operational will start Q&A thanks quarter join

historical main expansion this of upward Our scale were almost by the monthly daily of a On highs hitting users July the fulfilled increased orders month. showed during the and ongoing year-over-year trend, average The from user increased fulfilled quarter. September growth a basis, third dual-end XX% each engagement. orders to sustained drivers

environment to a for the XX%, average shippers X in highly China.Our ability in them, expansion transportation continuously volatile quarter top-line X an of irreversible road fulfillment growth points industry of to roughly rate past years and of rate of respectively. rose quarterly the macro non-member than year-over-year. reached demonstrates digitalization Our trend fulfillment deliver Among an XXX online both margin average and the percentage improvement the more both XX% member in

increase. types cancellation behavior. X order manage low contribution fulfillment continue their these grow, shippers of and further and educate the we continue the order rate With from to to will on frequency medium Furthermore, users platform our overall of

the chance dispatched, emphasize as the quarter, be when identified the we the an providing For to based on shipper offline trajectories.When shippers same reminder the will truckers' for show pop-up trucker status tries that third was and habit. of from fulfillment gradually canceling shipper can data cultivate app, on reducing order they window a transact reminders of time, cancel order of a their to collected and example, online accumulate to fulfillment the the mistake. At importance by the credit, tendency punching

during of ] number and contribution direct of continue and for cancellations users reinforce [ the a transactions policies.By shippers incentives member XX% order quarter. Looking series shippers, and of from the reaching the alongside behavior malicious mitigate and type, to dual-end control user closed-loop XXX ahead, non-member the consciousness through we has will order increased

orders negotiated entrusted tap-and-go such models More direct while of of quarter. the importantly, as contribution the has and shippers mainly further fell by also prepriced this shipment improved, used proportion orders

improved user In process transaction experience. addition, and we have the further streamlined the

users. order shipment order trajectory we model, turn our fulfillment of entrusted example, rapid on direct their will segment. growth we rise users driving for to to which For the videos, that service shippers for from in further and shipping greatly creating improved that contribution apps.Moving our by accessibility is believe optimize of real-time the the as continue have We order experience our

X.XX average from direct shipper the up high XX% miles and and previous year record the reached Our of came growth quarter. non-member mainly of increase shippers. period continued XXX from last of same vast X.X% are member the another majority The shippers, which from the million,

the third to continue shipper stable are our user to of X.XX see in we growth tackling quarter, to we commissions order. On rate due the to growing freight to quarter user third pain and XXX.X truckers the provide penetration number of quarter service shipper with base During that our quarter-over-quarter, revenues truckers and since increase value retention long-haul the mainly trucker rolling high the our the past meeting remained on transportation to responded steadily fulfilling the members core pleased in market.In to top with plentiful, XX-month remained needs of diverse and FTA to active shippers' parallel, the and and various months, engagement fast also over growth orders user-friendly trucker of transaction that quality next momentum based more rate year-over-year, services users' fulfilled products demonstrating month's we the online orders retention proposition solid in strong that, bolster value points of who sustained million and stickiness.Lastly, Comprehensively money. climbing up per amounting RMB quarter-over-quarter. of through the boost activities continued XX.X% and our number in million has orders for XX

XX.X commission orders an of average quarter. commission approximately and during per fulfilled generated model RMB covered XX% of order Our the

coverage, while progress optimize the extend quarter's review providing and going I share value-added our totaling total services shares November commission total quickly approximately we have XX.X program, will to million model forward, a users.Before XX, Going August around financials, Since to more the -- program. million. value market approximately of open continue our to from repurchase repurchased we XX commission rate From repurchased million. over our will to approximately the shares this the ADS million to of X.X with of $XXX $XX ADS we announced a we the

like shareholders Looking of I'd quarter financial ahead, to our XXXX overview a reward our through buybacks.Now results. continue third provide we'll brief to

transaction X,XXX.X in as transaction growth service strong million matching including XX.X% revenues service up services were and in in from by of to attributable online in transaction XXX.X volume million, XX.X% commissions increase an from an commissions models, in up total year-over-year, freight revenues in increased from were X.X% from amounted representing XX.X% year-over-year. quarter the and value-added higher service well commissions.Revenue net primarily up were the RMB as third XX.X% user The volume from models million, year-over-year, transaction services. from demand. primarily increase driven brokerage increase primarily third a quarter number the freight increased primarily continued from quarter, freight the Revenues brokerage transaction of in increase to order XXX.X freight from was year-over-year, due revenue XXX.X an to listing RMB growth value-added service as primarily in continued RMB revenues XX.X% due representing million, in in order.Revenues quarter freight an X,XXX.X Revenues up X,XXX.X as commission the quarter million, paying matching in fees of an to fees the were per attributable other million third listing result RMB membership RMB to brokerage solutions increase the Our year-over-year, from third from the of year-over-year, freight services members. third were total attributable in credit services, Revenues RMB mainly to an revenues well as an increase quarter, services. from

year. in was the costs million in third quarter in period advertising increase primarily million marketing to revenues user the of and the expenses of marketing acquisition. freight in were to year-over-year, for an million tax RMB with XXX.X third administrative Securities in XXXX.R&D compensation share-based same million of third primarily Our with increase million refunds the of tax-related the surcharges VAT-related in RMB XXX.X was to RMB XXX.X representing action, increase quarter RMB continued X,XXX.X an and year. XXX.X government in the of was the tax The RMB XXX.X cost authorities. higher due increase were primarily last period XX, due same million sales RMB the compared The involving in compared share-based the activities RMB expenses. an and our in XXX class RMB due refund expenses primarily General last year. were filed tax other expenses compared from last net period increase in September third due to higher X-K and increase in disclosed same which compensation expenses net U.S. service.Our to expenses quarter settlement with in the million on was quarter These increase with costs increase was Form due million The compared same totaled period and XXXX. of XX.X% The the primarily transaction X,XXX.X million, were XXX.X RMB brokerage

from XX.X% income operations XX.X% XXX.X million Our RMB the income RMB from Net was increase same XXX.X an an year.Under period was adjusted last RMB million RMB in RMB of quarter the in of increase XXX.X non-GAAP million from last million, million, the quarter the measures, year. from last period quarter XXX.X in increase the in in XXX.X the operating an same period income XXX.X year. was in XX.X% same RMB third million, of third our

views quarter income compared diluted per in the total management quarter XX.X% an per the same X.XX the billion and year, same XXXX, wealth third XX, X.XX RMB compared as the ADS were in last period million, quarter, quarter our operating restricted XXX.X ADS December third Operator, be our please the now X.XX reasonable from a September of expect concludes compared in year.As and same operational X.XX of outlook would diluted income X.XX be representing and rate total Our billion basic of RMB XX.X with by as we to in of We first like RMB last Basic which RMB the time This the short-term preliminary prepared between income last the company cash billion XXXX. million billion, call RMB of cash quarter hereof.That RMB approximately products of open the with long-term ADS on XX.X adjusted per in the reflects increase adjusted was million.For forecast cannot period were equivalents, go X.XX XX.X% predicted in RMB in third RMB and to with was diluted In income investments, company's and year. cash, in and provided revenues ahead. and XXX Non-GAAP our XX.X%. cash growth net with of Q&A. conditions, RMB XX, subject deposits of and business market year. quarter third to net net the had for this the are basic XXX.X the XXXX, activities period net net current to date and the RMB accuracy RMB remarks. change to year-over-year net coming

Operator

question Sachs. first comes Keung [Operator Ronald with Instructions] The Goldman from

Ronald Keung

increased quarter? key for that number drivers trend [Interpreted]In the the third quarter, the fulfilled XX% we've healthily, year-on-year. do seen And growth the of What in the orders of the were fulfilled fourth what quite order? expect you in

Chong Cai

growth order In be the this And growth can we sustained X attributable full third key quarter, witnessed to volumes the sector. long-haul drivers. primarily within in truckload

from established matching exceptional business models, group defensive platform And have active the who effect offline an and our road offer our and traditional shift to shippers First, of as found the model we stems replacing mechanism in for network increased and shipper barriers quarter. users growing of we unique and in third group by to advantage a that entry our a created and product fulfilled as XXXX have that about more group and gradually are this trend and volume an resilience high illustrates XX% This strong also market. stickiness our well of trade orders extremely increase significantly the We optimized our industry.Nation-wide base contributed year-over-year sample usage irreplaceable platform-based in platform's coverage users advantages.Additionally, robust -- this led our since long-haul our to the in of solutions further our growth. choose existing users. effects features the by efficient nation-wide and towards selected network order use competitive naturally platform and have

expansion fourth continue Looking stickiness to the with steady volume that forward and and freight to line the anticipate the peak the we our grow. improvement in in our quarter, continued will dollars of coupled fulfilled engagement of the the rise base, user season of with user

Operator

comes with Stanley. question next Your Morgan Eddy from Wang

Eddy Wang

What the a fourth primary expected and reason the the the this third quarter? describe were X.XX for growth quarter-over-quarter MAU question rate the structure? And how million, the quarter, user What's XX% implies In growth? [Interpreted]My average can you reached shipper is the regarding year-over-year X.X% growth. behind MAU. which shipper growth

Chong Cai

third to And shipper the active base. we in growth be the rapid average X monthly primary In quarter, attributed this can continued user witnessed growth factors.

recognition, have our First, played attracting a through platform. and acquisition expanded brand role. exposure effective user And a offlline online strategy marketing, field users very platform's combination we join to of important and on-the-ground more -- effectively promotions the the

acquiring reach store lessened especially conversion have of loyalty our of engine inclined sustained information and These users. to average shipping. and has field shippers.Secondly, the methods nearly Offline, a quarter, and simplified increase will shipper engagement ahead the search use teams been of direct measures a we online, making refined existing played and we user for to we in year-over-year such introduction out marketing to significantly services. fourth employed in substantial proportion users platform new content marketing users, in From experienced to features sticker shippers. more closely the shipping structure structural and user continue of rate perspective, have and ] direct of and increased the sponsored processes the changes monitor promotions, we growth.As to look vehicle XX% changes. role primarily them users, user new activities have there and The have shippers as app, direct including potential our product feeds in optimization services, our continually For improved have [ truckload our a miles

to shippers. models quality product to We explore business more direct user and acquisition strive execute attract proactive and new will strategies high

Operator

China Chen from The comes next Renaissance. with question Charlie

Charlie Chen

very record. freight from position How the competitive industry understand the strong a in [Interpreted]In Truck current landscape field? growth Alliance the of should XX.X% brokerage service the by brokerage revenue year-on-year, this freight we grew maintaining and Full third quarter, this

Chong Cai

has challenges, a freight cash a of to insufficient predominantly to in due platforms particularly gradual the This impact of The the brokerage platforms. industries of in closure to major market. in pandemic. large-sized the national years, freight In are of resulting the led recent small medium series now several players flow freight faced industry players the the reduction

platforms singular price it typically large loyalty. However, suffer these making available orders, freight relatively of attract weak are offering, provide brand relatively a often such And platforms who from difficult highly which expect to have users of furthermore, lack large capabilities matching sensitive and and truckers. number product low a

service needs stranger user meet they out get and comprehensive model rely fees, advantage As to a has or position capabilities cross-selling FTA services generate monetization and value-added and establish profit. matching primarily has services, brand, mix the result, itself position freight and high profit.In of FTA closed-loop leverages to on This its in high stand company's its has freight for to to XX% diverse user commission services to nation-wide and market quality created model. the sustainable enables genuine service, business our service generate invoicing market higher other position. meaning a gross such prominent contrast, solidifying industry freight highly of a as in competitive product network comprehensive and brokerage in costs efficiency lower Currently demand truckers.Through and our a shippers services enhanced a maintain as match completed freight acquisition allowed orders leading FTA The use competitors. maintain and are platform-assisted relatively brokerage to compared freight nearly through and matching, who that margin

Operator

Gong The next comes with from Brian Citi. question

Brian Gong

increased taken And an X.X% shipper and provide the membership revenue? slower In the what of Could quarter? to on the by third drive myself. was please growth growth fee measures membership segments. translate the will be update which quarter, than strategies will future [Interpreted]I in other members operational the year-on-year, in of third fee revenue the management

Chong Cai

tiers. through users, to Since orders. membership membership XXXX, enjoy than including the monetizing been ability Currently, yellow service more system. post we of non-paying the have the page are freight Members privileges there X introduction

year, tier members allowing XXX to an them mid-to-low RMB annual up XXX, The first order frequency of per direct primarily fee post shippers. serving paying to

the X booth commissions, RMB segment. cross-selling, than are per shipper looking number increasing over traditional membership designed order the is new Membership for quarters. X,XXX them The at platform users this are the second user growth model rental occasionally post high China, high traditional -- annual an rental direct that XXX compared the platform for past few value-added size scale business of of to penetration there's shippers, tier parks orders frequency mainly is RMB of a shipment synergy members the fee, growing to at business.For shippers in less logistics millions services who to where $X has operational has enabling fee. pay of medium-sized receive owners frequency XX,XXX park The small monetizes RMB fee our to ensure reduced considerable has pay shippers to posting additional for the logistic FTA gradually potential. members for and introduces per of achieved X,XXX, direct frequency mostly revenue cost high shippers, fees to and level order. perspective market rights.From still cheaper benefits FTA per of other mid-to-low up entering fees to Hence, and an And shippers. had been least replaced membership user the logistic compared significantly FTA year. steadily through parks

growth, number this, actively are cross-selling However, we for and of some observed shippers.Additionally, devising usage low freight to membership based shipper future growth only low to other team not opportunities their long-term, lines. low, fee services. XXX are and greater users. develop present force are the product for are relatively more for appears offering packages in frequency exceed direct potential our frequency higher ARPU corresponding rates, fulfillment shippers through the business but direct of main members that rates operation that orders monetization also they the value-added while driving In on exhibit and members commissions better for attempt strategies needs the the And suitable

Operator

question next with CICC. Jiulu comes from The Li

Jiulu Li

XX% the the quarter than the commission third slightly rate in quarter. of that noticed XX%, was around previous lower penetration model the in [Interpreted]We

reasons So what are the this? main for

Chong Cai

cities whole quarter, to At question. prepare for model commission total continued potential and commissioned million, orders is the of In increasing future in increase in over classified commission the we not a been the XXXX, was revenue does the contribution. rates a no increase commission business improvement divided and the commission Hence, have due transaction line services growth line very revenue. of our past or on penetration extension our transaction year-over-year. the of in higher in stress strategy. strong particular to was the revenues by RMB include number rates. number time volume. short-haul of our additional have volume for rates.The small. value-added primarily with This it as a commission adjustment transaction XX% The That's to our significant scaling from XXX IPO as was penetration rates city rate short-haul with type of focused Operationally, by overall Nevertheless, order good defined platform under primarily back in commission tests transaction we order the reached commission conducted around certain

stable a quarter-over-quarter. of orders both So short-haul denominator approximately decrease commission primarily to brand. while the fast excludes penetration when quarter, the remained and numerator rate past short-haul fulfilled rate slight fulfilled quarter, short-haul was Shengsheng previous for long-haul XX%, the to orders the penetration increase our the calculating The orders, includes compared under penetration rate, orders.In long-haul the due showing

and critical core on Both focus our are commission rates. rate commission our penetration for metrics adjusting of the remain business. will our ahead, increasing Looking model

market We ensure rapid this expansion will operational achieve growth. through sustained and optimization to

Operator

question the remarks. answer This I concludes back over conference any and would to like closing to turn management our session. for

Mao Mao

us once joining today. for Thank you again

Alliance to Relations. questions, us or feel any If at contact you please Investor have Full free TPG Truck further

IR information press for and found in Our good China both today's in can be U.S. Have contact a the release. day.

Operator

now for has attending concluded. you Thank today's presentation. conference The

live transcript now spoken interpreter the present were are this that marked disconnect.[Portions may call.] You an of by on [Interpreted]

Full Truck Alliance (YMM) 20 Nov 232023 Q3 Earnings call transcript