Ladies and gentlemen, thank you for standing by for Autohome's Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow management's prepared remarks. 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 the 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.

Thank you, Heidi. Thank you. Hello everyone, welcome to Autohome's third quarter 2023 earnings conference call. Earlier today, Autohome distributed its earnings press release, which can be found on the company's IR website at www.ir.autohome.com.cn. Joining today on the call are Chairman and CEO, Mr. Quan Long; and Chief Financial Officer, Mr. Craig Yan Zeng. Management will go through their prepared remarks, which will be followed by a Q&A session, where they will be available to answer your questions. Before we continue, please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the US 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 law. Please also note that Autohome's earnings press release and this conference call include discussions of certain unaudited non-GAAP financial measures. A reconciliation of the non-GAAP measures for the most directly comparable GAAP measures can be found in our earnings release. I will now turn the call over to Autohome's Chairman and CEO, Mr. Long for opening remarks. Please go ahead, Mr. Long.

[Foreign Language] [Interpreted] Thank you, sir. Hello, everyone. This is Quan Long, Chairman and CEO of Autohome. Thank you for joining our earnings conference call today. In the third quarter, our new businesses continued to drive Autohome's overall growth as we further optimized our revenue structure. This marks our 5th straight quarter of top line and bottom line growth on a year-over-year basis, while consistently maintaining a high net profit margin. Net revenues for the third quarter RMB1.91 billion. Revenues from online marketplace and others business increased 25.2% year-over-year, accounting for 31.4% of total revenue. Revenue from data products, in particular, generated strong growth momentum, increasing more than 30% compared to the same period last year. We also made substantial progress in deepening our collaborative efforts with NEV automakers. Revenues from NEV brands were up by nearly 70% year-over-year as a result. Moreover, adjusted net income attributable to Autohome for the quarter was up 2.3% year-over-year with our adjusted net margin hedging 31.7%. During the quarter, we accelerated the build out of our content ecosystem, which combines efficient tools, content and services to offer users the information they are seeking motivates creators to produce content and engage with our community, I mean, and create a virtuous cycle that drives growth across the platform. We also continue to explore new ways to develop, integrate and create synergies between the diverse business models across our ecosystem. The Autohome Energy Space franchise stores we recently launched in cooperation with TTP and Chengdu and Chongqing have given us the opportunity to further refine the new retail plus used car business model and drive further business development. In addition, we also upgraded the foundation of infrastructure and capabilities, our digital platform, to enhance the value of our data products and seamlessly integrate big data and the cutting edge technologies to empower the digital transformation of dealers. The rapid adoption of NEV is accelerating the transformation of the automotive industry, bringing new technologies and business models to the forefront. In this new market environment, we are focused on capitalizing on the major opportunities. NEVs and digitalization present, supporting our partners in the transformation of their businesses and broadening the services we have our offer. This will ultimately create a one-stop ecosystem that spans the entire consumer cycle from the research and the purchase phase through to the use and exchange of cars to drive long-term sustainable growth. With that, I will now turn the call over to our Chief Financial Officer, Ms. Craig Zeng for a close look at our third quarter operating and financial results.

[Foreign Language] [Interpreted] Thank you, Ms. Long. Hello everyone. I'm Craig Zeng, the CFO of Autohome. In the third quarter, we set up -- set up our efforts to systematically develop tools and content, widen the platform out and broaden our profile across the industry. With interest in NEVs growing, for example, we tested nearly 100 popular models to provide users with comprehensive, easy to understand and professional analysis and information. To date, more than 2.6 million users have used our testing tools to assist their car buying decision making. In addition, we promoted Autohome's August 18th Super Auto Festival our multiple platforms in collaboration with CCTV finance channel and other broadcast and social media platforms. Total exposure exceeded 14.5 billion impressions, which further strengthens our profile in the industry. At the same time, we launched the next development place for our service system, which combines online content with offline experiences to further increase our mind-share among users. At the Chengdu Auto Show, we showcased our purchase assistance service for the first time, which offers consumers a hand on purchasing experience where they can view and evaluate various car models accompanied by our highly experienced editors. We also launched our shopping guide program to encourage content creators to produce and promote content that facilitates the decision making process for consumers and boost overall car consumption through our platform. According to QuestMobile, mobile DAU in September increased 39.3% year-over-year to 63 (ph) -- 69.01 million underscoring our ability to steadily strengthen our leadership position in the automotive media vertical. Following the launch of our first brick-and-mortar NEV experience store last September, we further refined this business model by integrating our used car business. In addition to providing a one-stop service for NEVs from multiple brands that span from car selection to…

Thank you. [Operator Instructions] We will take our first question. Your first question comes from the line of Kenny Wang (ph) from CICC. Please go ahead. Your line is open.

[Foreign Language] [Interpreted] Thanks management for taking my questions. And I've got two questions today. First of all, could you please share your views on market outlook for the upcoming quarters? And do you expect continued price competitions among OEMs. And secondly, could you update us on the progress of the new retail model for a NEV? Especially, could you share with us the key operating metrics of pioneer cities such as Shanghai or Chengdu? Thank you.

[Foreign Language] [Interpreted] Okay. I will take the first two questions. In Q3, the economy continued to recover and rebound. According to the statistics released by the National Bureau of Statistics, in Q3 our GDP grew by 4.9% year-on-year, higher than market expectation. I have, according to the data, from CPCA, in Q3 passenger vehicle retail sales were about 1.8%. In Q2, this number was 21.4%; you can notice there is a big slowdown of the growth speed. This is because of the high base number of the same period last year; while at the same time, the consumers continued to be precautious about the commodities consumption. As a result, there is still challenges for the entire auto industry. And according to the data from CPCA in the first nine months of 2023, the overall profit margin for the Chinese auto industry is 4.9%, much lower than 5.7%, which is the overall industrial company's profit margin. However, I think that this is because even though ICE cars are still making profit, but their market share is declining. NEVs experienced a high speed growth, but most of them are still suffering from losses. As a result, entire auto sector are still going on the restructuring. So far, Central and different levels of the local government, they have been paying great effort to uplifting and stabilizing the auto production. And also released a series of policies and incentives to promote auto consumption. For example, there is policy about optimizing the car purchase restriction management to support the trading of the old cars for the new ones and accelerate the development of the used car market and accelerate and strengthen the development of NEV supportive facilities. We believe that with the above mentioned favorable policies, the auto sector consumption will continue to recover…

[Foreign Language] [Interpreted] So for the second question, the first thing we should look at is the number of the stores we build. Now actually, in Shanghai, Haikou and Chengdu and Chongqing, we already officially put our stores into operation. And besides, by the end of the year, we are going to build another 20 new shops. So this is very important indicator for us, the number of the stores. While at the same time, you can see that now for the numbers and indicators, we haven't disclosed this numbers in the essential cities. However, the speed of building our stores as well as the feedback we get from the consumers are pretty positive. And I think that this is a very popular trends in the future. And if you've got chance, we welcome all of you to visit our stores in different cities. And in the next one or two years, according to our development in different cities, as well as our cooperation with different partners, we will continue to promote the number of our stores. We have not only built stores in Tier 1, Tier 2 and Tier 3 cities, but also Tier 4 and Tier 5. We see very strong vigor and vitality in different tier of the cities. We plant that next year we're going to cover another 50 cities, and by the end of 2025, we're going to cover a total of 100 cities in China. We expect that with different penetration of the NEV, at a future new retail business will continue to contribute more in our financial contribution.

Thank you. We will take our next question. Please stand-by. Your next question comes from the line of Ritchie Sun from HSBC. Please go ahead. Your line is open.

[Foreign Language] [Interpreted] I will translate these questions myself. Good evening, management. Thank you for the opportunity to ask questions. I have two. So firstly, after the previous question that talked about used car, can management further quantify the expectation towards the used car market growth outlook in the next year? And what is your expectation towards the revenue and margin for this business? Second of all, various internet platforms are using AI and large language models to improve ad monetization, content production and leads filtering efficiency. So what is Autohome's strategy in this trend and in media services, leads generation, data products and among these other business lines, do we see any room to improve efficiency further? Thank you.

[Foreign Language] [Interpreted] Okay. Firstly, I will address the question about the used car market. You know, used car market is a very important segment in the entire auto sector. And used car market always got high attention from the government. Recently, you know, the government continuously to release a series of incentives to promote that consumption on the used car market. According to the data of Auto Dealers Association, in the first three quarters of this year, our used car market trading volume hit almost RMB13.5 million, grew by 12.6% year-on-year. And also, according to the forecast of Auto Dealers Association, this year our national used car trading volume is expected to hit historical high. We expect that next year used car market will continue to keep pace and this year's good trend, and continue to be very active and embraced a new stage of high quality development. In terms of the revenue, you can see that this year, the new car price cuts and promotion campaigns do generate some challenges for the used car market. But for Autohome, our used car business shows a very strong resilience. In the first of three quarters, you know, the overall used car business including TTP maintained a very good growth momentum. And TTP still makes profit so far. And next year with more and more new retail shops and stores operating in different cities, I believe that TTP will also leverage the space stations and to have their businesses all over China. And we're very confident that next year the overall used car business revenue will continue to expand. And the second question from the application side, we continue to apply AI and large language model related technologies and to seek more business cooperation opportunities so as to improve our product…

Thank you. We will take our next question. Your next question comes from the line of Thomas Chong from Jefferies. Please go ahead, your line is open.

[Foreign Language] [Interpreted] Thanks management for taking my questions. My first question is about the budget spent by OEM in the second half this year as well as the 2024. My second question is related to the overall used car market as well as the strategies for [indiscernible]. Thank you.

[Foreign Language] [Interpreted] Okay, I will first may take the question about the budget plan for the OEM in second half as well as next year. In the second half of this year, and in particular since Q4, we see that actually the OEMs, we would like to invest more of their budget in promoting the transaction from the user side. For example, to support the leads generation as well as to invest our advertisement or directly subsidize the consumers. And for next year, just like Mr. Long mentioned, we think that actually for the market investments, we will continue to be precautiously optimistic, because for the OEM, since their profit margin are under some pressure, we will pay more attention to the effectiveness of the budget investments. For example, we will prioritize the support to the dealers or directly subsidize the consumers. As a result in terms of the ad investments, they will be more precautious and they tend to further diversify their investment. So they will also pay more and higher attention to the effectiveness of that. And looking into the future, I think that we will continue to grab the opportunities, in particularly in two areas, first of all, accelerate a digital application of AI and secondly, do prioritize and focusing on NEV. And by leveraging our strengths, we will also try to win more customers and try to get their budgets and investments. And for the used car market, I already mentioned that due to the price cut of the new vehicles and because of COVID-19, we do see that used car market has been under some pressure as well as some restrictions. But I believe that in the future years, you know, the price cuts for the new cars already come to a specific limit. And we believe that the used car market can expect a double-digit growth. And for TTP, TTP is already generating profit. It means that it's already gone through this stage of survival. It's already enter into the stage of expansion and future development. In the future, we will continue to leverage the resources from the group, as well as the other partners to facilitate the development of TTP. And in the previous answered the questions, we also mentioned the three-in-one service format. So we think that it will greatly help TTP to develop and will continue to facilitate high speed growth. Okay, next question, please.

Thank you. We will take our final question. Your final question comes from the line of Brian Gong from Citi. Please go ahead. Your line is open.

[Foreign Language] [Interpreted] Commitment share, you know, when we will start the contract renewal with dealers for leads generation, and what's our expectation for the contract renewal this time? Do we still have room to increase our price? And along with, you know, the rising proportion of new auto sales from, new NEVs, how does management think about numbers of dealers from traditional OEMs? Will the number gradually decline in the future? Thank you.

[Foreign Language] [Interpreted] Thank you, Brian, for raising this question. Yes, we already initiated the contracts that renew with our dealers. However, we will not use price increase as a strategy for us to gain more profit. It has never been our strategy. Of course, sometimes using such, we charge more from the dealers. That is because we have been providing more services to our dealers, including offering more digital products to them. And I think that we never take a price increase as a strategy for us to gain more and higher performance. And this year, as we know, the dealers, they generally encounter some difficulties, so, we will of course never raised the price. So, from our side, we would like to empower and enable the dealers by offering more digital products and helping them to cut cost and improve efficiency. So in a word, in the past and present, we have never been using the price increase as a strategy for us to gain more profits. And the second thing about the number of dealers in your questions. In Q3, we see that the sales from the ICE car dealers dropped by a little bit less than 9%. Of course, the dealers are under some impact. And I see that the sales of the ICE vehicles have been declining. However, one the same -- at the same time, the NEV penetration has been on the rise. And you can see that in Q3, the penetration already hit 37%. So there are some rapid development trend for NEV brands. While at the same time, some traditional dealers are also transforming themselves into the NEV dealers. Therefore, our new retail business model, we are also trying to help those NEV dealers to further expand and to tap deeper into this market, because the market in a whole is very vigorous. And I believe that the number of dealers itself is not an issue at all. This thing is that how we can better adapt to all kinds of changes and dynamics, to reposition those dealers so as to be more adaptable. So by offering those digital products and by facilitating them with our new retail model, I believe that we can do a better job in the future.

Operator?

Thank you. There are no further questions at this time. I will turn the conference back to management for closing comments. End of Q&A

[Foreign Language] [Interpreted] Thank you, everyone. Thank you for joining us today. 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 feel free to contact us if you have any further questions. Thank you. Thank you. Bye-bye.

This concludes today's conference call. Thank you for participating. You may now disconnect.