Ladies and gentlemen, good day, and welcome to Full Track Alliance's First Quarter 2022 Earnings Conference Call. Today's conference call is being recorded. At this time I would like to turn the conference over to Mao Mao, Head of Investor Relations. Please go ahead.

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. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions, and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and discussion. A general discussion of the risk factors that could affect FTA's business and financial results is included in certain filings of the company with the SEC. The company does not undertake any obligation to update these forward-looking statements, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued earlier today. Joining us today on the call from FTA's senior management side are Mr. Hui Zhang, our Founder, Chairman, and CEO; and Mr. Simon Cai, our CFO. Management will begin with prepared remarks and the call will conclude with a Q&A Session. As a reminder, this conference is being recorded. In addition, a webcast replay of this call will be available on FTA’s Investor Relations website at ir.fulltruckalliance.com. I will now turn the call over to our Founder, Chairman, and CEO, Mr. Zhang. Please go ahead sir.

[Foreign Language] Hello everyone. Thank you for joining us on our first quarter of 2022 earnings conference call. [Foreign Language] Our growth momentum continues in the first quarter of 2022 with another quarter of solid financial and operational performance, despite typically slower seasonal demand, as well as challenges arising from the industry wide transportation resources shortage and disrupted network operations in certain areas of China due to the pandemic and dynamic zero COVID policies. Our GTV reached RMB53.6 billion representing year-over-year growth of 4.2% and the number of fulfilled orders grew 13.6% year-over-year to RMB25.2 million. In absence of new external user growth we still witness stable user activity trends in the first quarter, meaning attributable to higher user retention rates and right engagement levels. [Foreign Language] Our continuous improvement in the matrix was again demonstrated by solid foundation of our business and the ability to mitigate the impact of external events. As a result of this progress, we grew our total net revenue to RMB1.33 billion in the first quarter 53.7% higher than prior year period and beating the high end of our previous guidance, which was projected at RRM1.09 billion. While we grew our top line, we also improved our profitability. Under the non-GAAP measures our adjusted net income increased by 68.0% to RMB189.7 million in the first quarter. [Foreign Language] Overall, we are pleased with our first quarter financial and operational achievements. Looking forward, we believe that we will remain focused on increasing user frequency by fine-tuning our freight matching and fulfillment process and re-activating dormant users through targeted marketing activities. Propelled by these efforts, as well as the outstanding value proposition of our products and services, we are confident that our user growth will graduate resume following the successful completion of the pending data security review. [Foreign Language] Despite the recent lockdown short term impact on our business and the industry at large, the overall trend in China's logistics industry remained robust in the medium- to long-term. The industry movement towards digitalization and the accelerated introduction of policies that support organization are working strongly in our favor as they pioneer a digital standardized and smart logistics infrastructure across the value chain. Capitalizing on this momentum, we will cultivate our technological edge, explore new business models and strengthen our monetization system as we further unleash the great potential of our ever-growing, secure yet efficient nationwide logistics network and create value for all of our stakeholders. [Foreign Language] With that I will now turn the call over to our over our CFO, Simon, to go over our operational and financial results in more detail. Simon, please go ahead.

Thank you, Mr. Zhang, and hello everyone. Let's take a look at our first quarter operations. The first quarter is traditionally the low season for the road transportation industry. This, in addition to the continued suspension of our new user registration and the recent COVID resurgence and lockdown in some major cities created incremental headwinds for the entire logistics industry and brought short term uncertainties and challenges to our business. However, in light of the NDRC decision to relax restrictions and facilitate the full resumption of logistics operation, we saw a gradual resumption of business operations and sings of recovery in transaction broadly in the past month. And we believe that the current negative impact of the COVID will be short list. We remain confident in our past to long-term growth as we broaden our efforts to enhance our technological advantages and accelerate the industry's digital transformation. Our first quarter results are broadest testament to the strength and stability of our platform. Our average fulfillment rate reached approximately 22% in the quarter, representing only a slight year-over-year decline due to the short term truck shortage in some regions. Furthermore, during the first quarter, both our average shipper MAUs and average trucker MAUs who fulfill shipping orders or respond to orders on our platform remain stable with about 3.5 million active truckers fulfilling shipments in the past 12 months. We also witnessed an increase in the number of paying shippers as a larger number of non-paying shippers, active being enrolled in the shipper membership program as a result of as a result of improved perception of the value created by FTA’s platform. More importantly, we maintain our shipper and trucker retention rates, including both 12 months retention of paying shippers and next month's retention of truckers who responded to shipping orders…

Thank you. [Operator Instructions] The first question today is from Ronald Keung with Goldman Sachs. Please go ahead.

[Foreign Language] Congratulations on the results management. I want to ask about the platforms, fulfill GTV and number of orders maintained year-over-year growth in the first quarter. But it's around – it's a quarter-over-quarter decline compared with the fourth quarter. So want to hear the reasons, major factors and also how should we think of the second quarter of GTV and order volumes into the second quarter? Thank you.

[Foreign Language] In the first quarter, the platform for GTV and number of orders both maintain the year-over-year growth, mainly benefiting from the sustained increase in our shipments and stronger network sec. With the enhancement and improvement of product features and user experience we are seeing more and more shippers relying on the FTA platform for shipment, and these users have extremely high retention rate. In the first quarter the rolling 12-month retention of our paying shippers and next month's retention rate of trackers responding to others both based at around 85%. Such high levels of user business, while new user registration is suspended clearly demonstrated FDA's stable marketing position in the FTA industry.

[Foreign Language] So in terms of the quarter-over-quarter trend, the shipment volume in the first quarter was mainly affected by the following factors. First, first quarter is traditionally the slow season especially during the spring festival when shipment volume is usually at the lowest point in a given year. And secondly, the suspension of new user registration still affected business in a quarter. So since mid-to-late March we are seeing the pandemic resurgence resulted in highway closures and traffic controls in some cities which severely impeded trucker's fulfillment capabilities leading to an imbalance of supply and demand with fewer truckers available for shipment.

[Foreign Language] Despite the impact of multiple external factors, we remain committed to enhancing user experience and operating efficiency. Regarding the algo capability building in the first quarter we improved our product based on various matching, such as sorting and accurate recommendations, addressing certain mismatches between the order placement and shipment capacity and elevating overall matching efficiency. In terms of operations, our operational team provided guidance to users on resuming work after the spring festival, which increase the shippers and truckers activity level.

[Foreign Language] As for the second quarter, the lingering COVID operates in various regions nationwide resulted in different levels of traffic control, significantly impacting the logistics industry. Since May – since mid-April we have noticed a gradual recovery of industry logistics and platform capacity but it may take a while before returning to the pre-pandemic levels.

Thank you. Next question please.

Next question today comes from Charlie Chen with China Renaissance. Please go ahead.

[Foreign Language] Thanks management to taking my question. I have some question regarding the commission business. So first of all, how did commission business progress in the first quarter and also year-to-date including commission penetration and the commission rate? And also were commission business impacted by the pandemic situation? And what is the company's commission plan going forward? Thank you.

Thank you. This is Simon here. I'll address the question in English directly. So our commission's revenue in Q1 reached about RMB258 million, this was largely only to an increase in commission rates. As of the end of March, we have extended our commission model to 195 cities, but as it said due to the pandemic the average freight matching time increased quarter-over-quarters that's slightly lowering our commission penetration sequentially. Since the end of last year we have launched tiered commissioning by matching time, which has now been fully adopted in all regions where we operate. To some extent matching time reflects the popularity – so-called popularity of the other placement, and truckers are more receptive to commissions charged for those more popular orders. Our user survey data indicate that overall commission and feedback has been improving since Q1, which is also the main driver behind the continuous increase in commission rate. In addition, we adjust our commission strategy flexibly based on the changes in supply and demand dynamics. For example, at the end of Q1, we adopted a commission free strategy for freight that were labeled pandemic supplies to ensure the supply of those materials to areas hit by the pandemic is sufficient. Going forward, we plan to steadily increase the commission rate as well as the commission penetration by improving the overall trade matching efficiency because the commission charged essentially represents our platform's value and services. We will remain devoted to providing additional value-added services and improving product functions for our truckers, continually enhancing the user experience as we develop our commission business.

Next question comes from Brian Gong with Citi. Please go ahead.

[Foreign Language] I’m now translating myself. Thanks management for taking that questions. My question is related to entrusted shipment program [indiscernible]. Thank you.

Yes, the line was breaking a little bit, but I'll try my best to address your question. So after nearly a year of refinement and functional improvement, as of mid-May this year, we have achieved a nationwide coverage with our entrusted shipment program. Although there were mounting external challenges, including the COVID outbreaks, suspension of new user registration these all affected shipment volume. The program’s average fulfilment rate is still significantly higher than other type of matching services. The advantage of the entrusted shipment program lies in its platform lab pricing, which typically results in a higher matching certainty and faster matching. We also sort other placement by prioritizing high quality trucking resources to ensure the service quality. In addition, we have a dedicated customer service team equipped to provide various services such as scheduling order reviews and manual matching when it's necessary. These value-added services also created additional commissioning opportunities. Up to now the entrusted shipment program’s commission business has achieved a nationwide coverage with overall program in line with our expectation. The successful launch of the program enable us to further improve our user ecosystem and optimize user composition. Going forward, we'll continue to optimize our products and services by categorizing our transportation resources to allow more high quality truckers to join the program, enhance service quality, and user experience and increase user stickiness on the platform, eventually raising the overall matching efficiency.

The next question comes from Jiulu Li with CICC, please go ahead.

[Foreign Language] This is Jiulu Li from CICC. And thanks for taking my questions. I have two questions here. The first one, what's the progress of the new business, including LTL and intra-city in first quarter. The second one we have recently noticed that some media reported that FTA will resume new user registration. Does this mean the cybersecurity review is coming to an end? Thank you.

Thank you. On the first question, first of all, because new user registration has not yet resumed, so we do not extend our intra-city business to more regions in the quarter. For those pilot cities, we have already entered our intra-city business to remain stable over the quarter despite the impact from the pandemic. Monetization in those cities also progressed smoothly. In Q1 the transaction commission combined with membership fee contributed to a positive growth margin in those cities, proving the sustainability of our business model. Going forward as new user registration resumes, we plan to extend steadily to meet shippers’ one-stop shipping demand. On LTL currently we are mainly exploring in the dedicated line model. This is a franchise model that integrates offline dedicated line transportation capacities, where the shippers pay and order online with our platform. And we dispatch the orders to franchise dedicated lines responsible to fulfill those orders, as well as the LTL, last mile delivery. In Q1 the Chinese New Year and the COVID outbreak both impacted the LTL business model. However, as we kept improving our operational efficiency and refining the economic model, the gross margin of the LTL business in those private [indiscernible] is consistently improving. Regarding your second question, unfortunately, we're not able to comment on any such media post. We will update the market on any material progress through public disclosures. We have been incorporating actively with the Cyber Security Review Office of the CAC throughout the review process. Going forward, we will continue to work with the CRO to comply with the regulatory requirement and remain committed to protecting our platform’s cyber security by implementing effective measures.

And that concludes the question-and-answer session. I would like to turn the conference back over to management for any additional or closing comments.

Thank you once again for joining us today. If you have any further questions, please feel free to contact us at Full Truck Alliance directly or TPG Investor Relations. Our contact information for IR in both, China and U.S. can be found on today's press release. Have a good day.

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