Ladies and gentlemen, good day and welcome to Full Truck Alliance's Fourth Quarter and Full Year 2022 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. 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 this forward-looking information, 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 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 conference 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 today on our fourth quarter and full year 2022 earnings conference call. During the year, uncertainties persisting within the macro environment posed various challenges to our operations. Despite these headwinds, we are pleased with our performance in the fourth quarter, as we are ending 2022 on a strong note. [Foreign Language] Over the past year, we achieved progress across all of our business segments that are in different stages of development. We took steps to standardize our platform data management and upgrade the network security system by leveraging big data and advanced freight matching algorithms. This enhanced the users' experience by providing them with high-quality, efficient, and full-coverage capacity network services in a secure network environment. Additionally, we made considerable efforts in platform process simplification, improved apps usability and user misconduct rectification. These actions mainly included building a shipper rating system, creating the five-star shipper accreditation, launching a trucker growth pilot program, and cracking down on malicious price-cutting behavior. By maximizing both shippers' and truckers' experiences, and elevating operational efficiency, we expanded our high-value services to more shippers and truckers during the year and safeguarded their rights and interests. As we ended 2022, we were pleased to see a revival in user growth in terms of both shippers' and truckers' fueled by reinstating new user registration in June. With the number of high-quality users growing on the platform, we are improving our platform ecosystem to provide a more secure transaction environment for our users. Furthermore, as corporate social responsibility is one of our core values, we lowered the number of truckers' trucks with empty loads, saving energy and reducing carbon emissions through implementing new technological innovations, further contributing to the green development of the transportation industry. [Foreign Language] For the full…

Thank you, Mr. Jung. And hello everyone. Today as usual, I will first go over some of the highlights for the quarter, followed by a brief overview of our key financials. The quarter began with the lingering pandemic challenges weighing on the economy, while the fourth quarter is the traditional peak season for freight transport, various regions continued to experience certain fluctuations in freight volume in October and November due to rolling COVID policies, which negatively impacted our business. Following the removal of COVID restrictions in December, the order volume from the platform gradually ramped up, reaching the full year peak in early December. However, in mid-December, the order volume declined due to a large number of truckers getting infected with COVID, which affected overall transport capacity. As infected truckers returned to work and transport capacity recovered after the Chinese New Year, we see activity within the freight industry resurging from the lows of last year. Despite the many disruptions, our average fee rate reached approximately 24% in fourth quarter, increasing on a monthly basis with our average fulfillment rate reaching 26.4% in December. The increase in fulfillment rate was due to easing COVID policies, which strengthened truckers’ willingness to take freight orders, while we also progressively restored the supply and demand balance between truckers and shippers. Moreover, with the resumption of new user registration, the overall number of shippers on the platform grew, of which most of them are direct shippers with relatively higher fulfillment rate as compared to middlemen, and therefore contributed to our improved fulfillment rate. Now, looking specifically at our users, we were able to maintain the previous quarter's momentum that was ignited by the revival of new users registration. The continued uptake in the overall users during the fourth quarter pushed our average shipper MAUs…

Thank you. [Operator Instructions] And our first question today comes from Ronald Keung with Goldman Sachs. Please go ahead.

[Foreign Language] Thank you, management. Just want to ask about that the pandemic impact is mostly behind us, and we are also seeing the overall kind of macro economy kind of improving. So against these backdrop in 2023, how do you view the overall strategy direction of the company and what are the company's business priorities this year? Thank you

[Foreign Language] Our priority for 2023 is to reinforce our platform's core competitiveness and enhance user business. The removal of pandemic controls has been a game changer for us as business activities returns to normal. As the demand and supply gradually resume, we will double our effort in building our brand equity along with improving operations as both use ends. For truckers, we plan to successively implement our trucker hierarchical management strategy in various regions throughout the country. Truckers will be incentivized to improve service quality as well as to increase their activity levels. On the shipper side, we will intensify and broaden new user acquisition and in combination with a series of operational activities including: promoting users, first time fulfillment and converting non-paying users into 688 members, thereby increasing shipper's usage frequency and user business. [Foreign Language] This year we will remain focused on full truckload transportation to solidify a more comprehensive foundation for the platform business. As for our new business initiative, we will take a steady approach of validating the innovative business models, while balancing a skill and efficiency. Thank you. Next one, please.

Thank you. Apologies everybody and our next question today comes from Charlie Chen with China Renaissance. Please go ahead.

[Foreign Language] So in the fourth quarter the platforms fulfill GTV rose by 3.5%, and average freight rate increased by 6% quarter-over-quarter. What are the reasons for these changes? And how do you see the freight rate trending going forward? Thank you.

Actually, let me address the rest of the questions in English. Our sequential GTV growth in the past quarter was primarily attributable to an upswing in users – in new users following the resumption of new user registration, which partially offset the pandemics negative drags on business. As we phased the bottlenecks due to transportation capacity constraints from the pandemic control measures, short-term freight rate rose, which had a persistent and lagging impact on transaction volume. When the pandemic control measures were lifted in December, the demand recovered as evidenced by our platform data, yet the supply was not fully able to – was not able to fully catch up with demand. However, this issue was gradual resolved after the Chinese New Year as more truckers returned to work. Regarding the freight rate, its increase in the fourth quarter was primarily due to higher fuel prices in 2022 in addition to the changes in the imbalance of supply and demand resulting from the pandemic. Looking ahead into 2023, while few prices are still high, the pandemic's impacts are gradually exceeding. As such, we expect the overall freight rate to slowly return to a reasonable price range. The freight rate is affected. It's affected by a variety of external factors, including few prices and highway toll fees, among other things, which are difficult to predict, and they are impacted by factors that beyond our control. In comparison, the platforms fulfilled other volume is a better reflection of our overall operating capabilities, and this is also why we mentioned as we mentioned previously, we will no longer focus and disclose GTV related operating metrics starting from the first quarter ours.

Thank you.

Thank you. Our next question today comes from Jiulu Li with CICC. Please go ahead.

[Foreign Language] The number of few orders decreased by 2.5% quarter-over-quarter in the fourth quarter. What other factors that contributed to this? How do you see the volume of fulfill orders trending in the first quarter? Thanks.

Yes. Firstly, we see the negative impacts of pandemic weighted on our operation in the last quarter, and these headwinds are were most – were more pronounced in October and November, as we experienced various – varying degree of logistics disruptions in some of the key provinces, which with large freight volumes such as Hunan, [indiscernible], Shandong and Hebei. Subsequently, the overall transaction volume was below our expectation around double 11th, the e-commerce sales promotion season. The average daily transaction volume only began to rebound after the removal of pandemic control measures in December, and gradually reached its peak for 2022 by year-end. However, the upturn in orders from newly registered users in fourth quarter partially offset the pandemic first effects. Judging from our operating performance since January this year, the freight volume recovered better than expected after the Chinese New Year as it is achieved outstanding year-on-year growth, in the absence of any unexpected external changes, we anticipate a year-on-year increase at low teams in overall other volume in the first quarter, and – as both demand and supply recover.

Thank you. And our next question today comes from Cherry Leung with Bernstein. Please go ahead.

[Foreign Language] So, I’ll do in English, can you please provide an update on your shipper members expansion, and do you see any changes in the truckers and shippers activities in the quarter? Thank you.

Thank you. In the fourth quarter we continue to advance our shipper membership strategy. As a result, the number of shipper members grew to 730,000 up almost 20% year-over-year. The growth was primarily attributable to an increase in our 688 members who are mostly direct shippers. As our year-over-year growth in the 688 members exceeded 30%. Additionally, as part of our strategy to increase user growth, we remain focused on prioritizing user experience in the fourth quarter, for example we committed to improve the fulfillment rate of new non-member users, first three orders on a platform and increased our telemarketing coverage. This facilitated user conversion upon initial purchase of membership, thereby enabling us to reach our target of high quality membership user growth. With respect to user activity, truckers ability to respond to orders and fulfillment capabilities fell sharp as slightly on third quarter due to the pandemic control measures in October and November. That being said our platforms users still displayed strong thickness resulting in a steady retention rate quarter-over-quarter. Going forward, as the industry recovers and we continue to strengthen our brand, we expect to maintain high level of stickiness and growth from both shippers and truckers.

Thank you. And ladies and gentlemen, our next question today comes from Thomas Chong at Jefferies. Please go ahead

[Foreign Language] Thanks management for taking my questions, given the macro tailwind, can you elaborate more about your full year outlook in terms of volume growth as well as full year revenue guidance? Thank you.

Thank you for first quarter to date, we are very pleased to see that the demand from both shippers and truckers have recovered significantly, and we expect the overall other volume to deliver sequential growth quarter-over-quarter. Following this trend we are confident to achieve a year-over-year growth in the high-teens to low-20s for other volume on a full year basis. On the revenue front, we expect our total revenues for the first quarter to be between RMB1.56 billion and RMB1.64 billion representing a year over gross rate of approximately 16.9% to 23%. We expect primary driver for the revenue will be continued growth in transaction commissions. For 2023, we expect revenues from transaction commissions to maintain a healthy long rate as our user base, and our volume continue to grow. At the same time, we remain committed to boosting the level of commission penetration as well as to further enhance our overall commission rate.

Thank you, and ladies and gentlemen, this concludes our question-and-answer session. I'd like to turn the conference back over to management for any final remarks.

Thank you once again for joining us today. If you have any further questions, please feel free to contact us at Full Truck Alliance or TPG Investor Relations. Have a good day.

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.