Good evening, investors, analysts, and friends from the capital markets. Thank you for attending the 2025 Interim Results Investor and Analyst Conference of Tuhu. My name is Chen Zhe, Head of Investor Relations and a Company Secretary. The presentation is being conducted in the form of a remote conference call. Please allow me to introduce the management team joining us today, Mr. Chen Min, Chairman of the Board and Chief Executive Officer of Tuhu, and Mr. Zhisong Zhang, Chief Financial Officer of Tuhu. Before we officially begin, please take a moment to carefully read disclaimer displayed on the screen by attending this conference, which includes this presentation or by reviewing the accompanying materials, you are deemed to be bound by the limitations set forth in disclaimer. Simultaneous English interpretation is available for the conference.
If you join via telephone, please press the asterisk key followed by the number four to switch to the English channel. For online participants, you may click on the globe icon on your screen to change the language. We will have four parts for today's conference. Mr. Chen Min will introduce the company's business performance and progress in the first half of 2025. Mr. Zhisong Zhang will review the company's overall financial results and highlights for the first half of 2025. Finally, we will leave time for management to take questions from online investors and analysts. If you would like to ask a question, please click the raise hand button in the meeting system. Investors dialing in can also press the key followed by the number one to raise their hand.
First, please invite Mr. Chen Min, Chairman of the Board and the CEO, to present today's management report on the company's overall operating performance and business progress in the first half of 2025.
Hello, investors, analysts, and friends from the capital market. Thank you for joining our interim result conference. In the first half of 2025, just like many other official consumption sector, China's automotive service industry remained in a period of a deep adjustment. The environment continued to affect owners' spending behavior, with growing emphasis on affordability and value for money. The international trade environment exerted pressure on the supply side of the industry. The upstream supply chain was occasionally squeezed by shifting trade policy, leading more exporters to turn to domestic market for distribution channels, which in turn accelerated the localization progress for auto parts substitution.
The rising number of new energy vehicles and older vehicles boosted demand for services such as car detailing and quick repairs, making consumer demand in the automotive service industry more diversified than the previous year. In the first half, filled with both challenges and opportunities, we remained focused on what we do best with standardized, digitized, and intelligent operational capabilities, coupled with a flexible and efficient supply chain management system. We adjusted our strategies in a timely manner to adapt to the market, enabling us to achieve steady growth against a tide in the complex and a volatile environment. In terms of financial performance, in the first half, we achieved a revenue of RMB 7.88 billion, representing a year-on-year increase of 10.5%. This growth rate exceeded that of the full year of 2024, putting us back on the track of double-digit growth.
Thanks to our continued improvement of management efficiency and operating leverage, we achieved adjusted net profit of RMB 410 million in the first half, up 14.6% year-on-year, and it generated free cash flow of RMB 350 million, up 32.2% year-on-year. A solid financial performance is a cornerstone for our business development. At the same time, we've maintained rapid growth on the user side. As of the end of June 2025, our user has reached 150 million. By continuously optimizing our products and services and developing, applying more efficient and intelligent operation tools, including AI algorithm, we have increased the efficiency of the new users and stickiness for existing users. As of the end of June, the number of transaction users in the past 12 months reached 26.5 million, representing a year-on-year increase of 23.8%, maintaining a strong momentum.
We also see new energy transaction users accounted for 12.8% of our total users, an increase of 4.2 percentage points year-on-year. This help us to expand our user base, help us to seize opportunities from the transformation of the new energy industry, and to identify new growth drivers for related business. On store side, in April, our store account surpassed the 7,000 milestones. By the end of June, the number of operating Tuhu workshop stores reached 7,205, a net increase of 894 compared with the same period last year. We further optimized our nationwide network and continued to fill gaps in undeserved areas. By the end of June, our coverage rate in the county-level cities with more than 20,000 passenger vehicles in operation exceeded 70%, while maintaining a rapid pace of expansion and adapting to the market changes. Our store continued to maintain strong profitability and high margin of safety.
In June 2025, the proportion of profitable Tuhu workshop stores remained around 90%. The overall economy and industry market environment are undergoing drastic structural changes, and we are adjusting our strategy to adapt to these market shifts. The pressure on price on the consumer side continued to intensify, with consumers showing an increase in pursuit of low prices and value for money. In a fast-moving consumer goods market, the average selling price in urban areas dropped by 3.4% year-on-year last year and it fell another 2.5% in the first quarter of the year. In our industry, the continuous increase in the average age of passenger vehicle has further heightened users' price sensitivity. According to the market statistics as end of 2024, vehicles over seven years old accounted for 58.9% in China's used car age owners is the mainstream consumer group.
According to the field research conducted by industry institutions, the first half of 2025, many auto service stores experienced a significant deterioration in the key survey indicators such as the consumer traffic, output value, and profit proportion of stores, with both output value and profit declining from over 60% last year to more than 80% this year. Nearly 40% of stores saw a sharp decline of more than 20% in consumer visits. A large number of industry participants are facing severe survival challenges. Despite this downturn, during the same period, we achieved a rapid growth in revenue, user, and store numbers through deepened refined operations and intensive support to stores. Behind this achievement lies the combined effect of numerous operational initiatives and new measures. Let me introduce some of our business progress in the first half of the year.
We continue to focus intensively on brand building and user operations. In terms of brand building, the first half of the year, we invited rider and racing car driver, Han Han, to serve as our professional image ambassador. Leveraging his image advantages in racing and the cultural communication, we further highlighted his professional brand positionings. We also sponsored the widely discussed phenomenon event, Su Chao. It's a Suzhou provincial football game, participating in this publicity and promotion as an official sponsor. We work with the CATARC National Inspection Group and other industry authorities to launch professional product evaluations such as the Super Gold test. We conduct seasonal and scenario-based testing for various auto parts. in April, we established China's first professional testing lab for film products in our auto service platform, named the Tuhu Car Gold Film Testing Center.
It provides consumers with comprehensive product performance analysis and purchase references. In channel operation, we keep optimizing our user experience, and our user conversion rate increased by 2 percentage points in the first half of this year. We continue to develop user benefit system, consumption depth, and loyalty keeps growing. Our super membership user average annual consumption frequency has exceeded 12x . We now have nearly 15,000 creators, with an average over 100,000 videos released this month. We also work with Meituan to list all our store information on their platforms. The number of newly converted tires and maintenance transaction users grew 139% year-on-year in the first half. Our new channel transaction users grew by over 200 year-on-year in the first half. By mid-2025, Tuhu's unaided brand awareness has steadily climbed to 55%. Our user growth has also maintained very strong growth.
In the first half, Tuhu's app monthly active user reached 13.5 million, with a year-on-year growth of 17.5%. The transaction users' annual repurchase rate rose 64.5%, up 3.4 percentage points year-on-year. The proportion of repeat user among transaction user reached 65%. We also have some industry-leading measures for the further improvement of our employees. In terms of the store development, we focus on selecting young, high-quality franchisees in response to overall economic and employment environment. We have jointly launched a youth car service talent entrepreneurship support program in China Youth Employment and Entrepreneurship Foundation, providing comprehensive support such as franchisee fee waivers, brand marketing investment, and product subsidies. This policy received a strong market response. We also see reputable store-targeted franchisee program for quality existing franchisees with zero complaints and low complaints, offering new store franchisee fee waiver to encourage reinvestment while improving service quality.
In Q2, our new store signing from reputable stores franchisee accounted for 17% of all new signing by existing partners. We also launched the Billion Subsidy 10,000 Store Together program. Through a series of provincial policies and resource stores, we developed higher subsidy guidelines tailored for the development and also the needs of different regions. In the first half, we see as of June 30, 2025, we had nearly 300 Tuhu workshop stores in Beijing alone, with a city-level paying user penetration rate of around 18.5%. In Jiangsu province, the number of workshop stores reached around 700, with provincial user penetration close to 15%. In Shanghai, we have about 400 workshop stores with over 35% penetration rate. Beyond traditional strong provinces, as we steadily advance our market penetration strategy, in Guangxi Province, the number of workshop stores exceeds 200, with user penetration rate reaching 11.3%.
In Xinjiang, the number of workshop stores continued to grow, with a year-on-year increase of 62% in the first half of 2025. We also placed great importance to comprehensive store capabilities building and continued operational improvement, which has not been compromised despite economic pressure. Since the end of last year, we have continued to empower stores through training in new media, content creation, providing more effective localized consumer engagement tools, and engaging user experience capabilities. We use AI and other new technologies to develop tools embedded in daily store operation, improving standardization service management, while reducing reliance on back office labor. We also enhance the construction standards and service capabilities by launching new features such as intelligent quotation and Blue Tiger System's complex project and progress guidance. Those operational initiatives yielded positive feedback in store performance.
In the first half of 2025, same-store fulfill user volume grew by 7.2%, higher than the industry average this year significantly. We also continued investing in new store support. Our new store upgrade program provides comprehensive assistance through traffic support, exclusive promotional campaigns, on-site supervision and training, technical guidance, targeted customer engagement, and store incentive mechanisms, ensuring steady growth for the stores in their ramp-up period. In the first half, the proportion of the profitable new workshop stores increased by 5.5 percentage points year-on-year, and average monthly revenue per new store grew by about 4.4%, fully validating the effectiveness of our new store support program. In terms of the products and services, we continue to enrich our product portfolio in the first half.
In terms of tire business, China's replacement tire market faces sluggish growth due to both consumption downgrades and export bottlenecks, with noticeable product price decline, yet we still achieved resilient growth in the first half. Among them, leading brands such as Michelin and Continental performed strongly in Tuhu's channel, achieving steady sales growth. On the other hand, we actively adapted to the consumption environment and expanded our high-value product portfolio in line with our proprietary product strategy. In the first half, we completed 100% coverage of a mid-to-low price segments for major specifications of a mid-to-long car age models. This drove a 26% year-on-year increase in tire transaction users with vehicles over 10 years old, while the proportion of online sales from our proprietary tire increased by about five percentage points. In terms of the maintenance, we leverage supply chain advantages.
We partner with several renowned brands to launch highly competitive oil product packages with high quality and low entry prices. This met consumer demands for value for money, driving 68% of year-on-year increase in oil sales in the economy price segment during the first half. In other businesses, our proprietary battery brand online reach expanded to over 70% of users. The number of technicians offering offline door-to-door services grew to around 5,702, who flash service 28-minute guaranteed arrival coverage more than doubled year-on-year in the period. Now let's take a look at the business in terms of the light beauty segment. We have continuously enhanced the service supply for car wash and detailing. By the end of June, we had more than 6,000 Tuhu workshop nationwide and about 26,000 partners who are offering services such as car washing and waxing.
Our various car wash card products have been widely welcomed, with cumulative sales exceeding 1.1 million in the first half, representing a year-on-year growth of over 200%. To address the queuing issue of car washes, we introduced a buy idle tax for stores and used dynamic traffic allocation to distribute instant wash requisites, while also optimizing the SOP of light beauty processes, significantly improving customer satisfaction. With stronger service supply and a more refined operation, our online daily orders for light beauty service in the first half increased by more than 75% year-on-year, with peak daily orders exceeding 150,000, doubling compared with the same period last year. Consumers acquired through car wash and detailing services have also shown excellent cross-conversion potentials. In deep beauty, we see about more than 70% of deep beauty categories revenue from self-owned and controlled products.
We developed our deep beauty business, also helped us attract a large number of new car owners and NEV users. Currently, about 45% of deep beauty consumers are new car owners with vehicles less than one year old, and around 33% are NEV owners. These create opportunities for us to build full lifecycle service trust with these new consumer groups from the very beginning. We have also expanded the coverage of core product categories in our quick repair business. We launched a technician badge certification system to evaluate and certify service levels by project linking them with store service offerings, thereby gradually standardizing repair categories as routine business. User operation is also what we are good at. We improved the conversion rate by developing product category shelves, fault diagnosis analysis, and in-store inspection services. On supply side, we expanded brand coverage in key categories to better meet diverse customer needs.
In the first half of the year, our online order fulfillment rate increased to 90.6%. Offline, we promoted intelligent algorithm-based distribution models and improved multi-channel supply solutions, thereby enhancing product availability and sales conversion for quick repair services. As a result, in the first half of 2025, our quick repair category revenue grew by more than 60% year-on-year, with some of leading categories grew by over 100%. On store side, quick repair services made a significantly greater contribution to the revenue of the workshops. With over three years of operations, quick repair business grew. It not only enables our consumers to enjoy more standardized, reliable, and comprehensive auto services, but also allow our store partners to share in this growth. Our NEV business has continued its rapid growth in the past 12 months.
The number of NEV transaction users reached 3.4 million, accounted for more than 12% of total transaction users on the platform, with penetration constantly exceeding China's overall NEV ownership penetration rate. In traditional fuel electric shared service categories, we focus on the specific needs of NEV owners by working with suppliers to launch NEV specific product lines and services. In the three electric business, battery, motor, and electronic control system, we've also advanced repair capability building. In the first half, nearly 1,000 Tuhu technicians had obtained the low voltage electrician certificate and over 100 certified stores were equipped with NEV power battery repair capabilities. Solid service capabilities form the foundation for all our business development. As the number of NEV out of warranty continue to rise, out of warranty business has also accelerated.
In this year, we launched multiple specified services projected targeting common issues and needs for older high-retention NEV models. Currently, core projects have been rolled out in 54 cities, driving a year-on-year increase of over 200% in NEV out-of-warranty repair orders. In terms of logistics, we have coordinated hundreds of our self-operated routes with external transport capacity to connect the 32 regional warehouses, 662 forward warehouses, and the 7,205 Tuhu workshop stores nationwide. As of now, our warehouse network capacity and self-operated delivery coverage to terminal stores have been further expanded. In the first half, our same-day delivery rate increased by approximately six percentage points year-on-year to 83% delivery from forward warehouse within five kilometers in 30 minutes or 10 km in 60 minutes, and reached 97%, maintaining a clear industry lead. Meanwhile, our overall fulfillment cost ratio decreased by 0.5 percentage points year-on-year, falling to 4.1%.
In the first half, our newly built Guangzhou automated warehouse entered regular operation. It is also the first automated warehouse in the automotive service industry designed based on retail demand using leading domestic and international automation equipment with multiple technological innovation. Given the characteristics of retail with multiple SKUs, high throughput, and low average items per order, our automated warehouse uses high bay storage and automated stackers to significantly improve warehouse space efficiency and store efficiency. Sorting costs are substantially reduced through robotic arm sorting and AGV transportation. We also pioneered the intelligent recognition of tire toe codes and enhancing item-level accuracy and sorting efficiency. This warehouse has been debugged in Q2 and operated smoothly during this year's 618 Shopping Festival. It can meet the growth needs of Guangdong Province and surrounding areas for the next five years.
Its high level of automation allows 2.5x efficiency improvement compared with traditional warehousing while reducing the labor cost by 60%. We will further explore the applications of new technologies in our warehouse network, implementing projects such as automated warehouse and unmanned delivery vehicles to continuously improve management, increase turnover efficiency, and reduce operational costs. In terms of our corporate social responsibility, we always maintained a strong sense of responsibility. In terms of disaster response, we have for years provided emergency assistance to regions severely affected by heavy rain and typhoons. During the nationwide heavy rains in July this year, we again launched emergency rescue operations, providing targeted fee inspection, maintenance, cleaning, and disinfection services to ensure vehicle safety for car owners.
In terms of social welfare, the second consecutive year, we organized college entrance examination support activity, setting up care service stations at multiple examination locations nationwide to provide professional assistance to vehicle transporting exam candidates. Looking forward, we will continue to adhere to long-termism, firmly upholding Tuhu's development conviction in challenging conditions, advancing with professionalism and resilience, and leading the industry forward. Thank you very much. This concludes my presentation.
Thank you, Mr. Chen, for your introduction of the progress in the first half. Now, I would like to give the floor to Mr. Zhisong Zhang, the CFO of Tuhu, to share with us the financial performance in the first half of 2025. Thank you.
Next, I will present the financial performance of the first half of 2025. Just like Chen Min mentioned earlier in the business section, the overall industry environment in the first half of the year was very challenging, filled with both anticipated and unanticipated adverse factors. However, these didn't fundamentally affect our two critical supply-demand metrics that are essential to our financial data, transaction users, and store count.
Regarding transaction users, the 12-month figure as of June 30 increased by 23.8% year-on-year, higher than the growth in the same period of 2024, and roughly in line with the full-year growth of 2024. Like we mentioned before, last year was the first time our 12-month transaction user exceeded 20 million, and this number has now surpassed 26 million in the first half of this year. In terms of store count, we added a net 894 stores compared with last year, 630, representing approximately 14% growth.
Compared with the end of last year, the net increase was 331 stores. The figure represents net additions, while our actual new stores in the first half exceeded 400, and our store openings in the second half are expected to be significantly faster in terms of city distribution. The proportion of stores in Tier 3 and lower markets has further increased. Now, let's take a look at the revenue growth. Our total revenue in the first half of the year increased by 10.5% year-on-year from RMB 7.13 billion last year to RMB 7.88 billion. From the chart, you can see that aside from the decline in the new business revenue due to changes in business structure, all major business segments achieved year-on-year growth in the first half. This includes our two largest revenue-contributing segments, tires, chassis parts, and automotive maintenance, each growing approximately 11%.
Although both tires and maintenance products faced significant pressure on unit prices with consecutive declines over multiple reporting periods, the high growth in order volume and the strong performance in certain quick repair categories still enabled double-digit growth. In terms of growth performance, the fastest-growing segment in the first half was other automotive products and services, growing 16.1%. This was mainly driven by the significant growth of the car wash and beauty business. Additionally, revenue from car product supermarket categories, which include deep beauty services, rebounded after adjustment in the previous reporting period, contributing to the overall growth of other automotive products and the service segment.
In the auto parts segment, Qipelong, our forward warehouse instant procurement service, grew faster than the company overall, particularly after we increased the density of forward warehouse layout in the mid and lower-tier cities and strengthened external procurement management in certain core regions alongside with the rapid development of the quick repair business. However, we continue to reduce our traditional auto part Qipelong wholesale business. We saw a revenue decline by 22% in the first half, partially offsetting the growth from instant procurement, resulting in a combined growth of 8.4% growth for the segment in H1. Revenue from advertising, franchisee, and other services increased by 6.6% year-on-year. Within these, franchisee service revenue grew by 12.1%, mainly due to higher management fees and profit-sharing driven by store expansion and improved single-store profitability.
Advertising revenue increased approximately 31% year-on-year, driven not only by the platform's scale expansion, increasing its influence, encouraging partners to allocate more advertising budgets to our platform, but also by the overall increase in ad budgets due to upstream industry growth pressure. Meanwhile, we see other non-core business, such as used cars and SaaS, continued their strategic contraction, which also lowered the overall growth rate of other services segment. We see those non-core business also include sales of the new energy vehicle repair and also maintenance business. This is about other service segment. At the growth margin level, due to the high base in the first half of last year and the decline in unit prices of core categories resulting from our efforts to strengthen product quality to price ratio, the company's overall growth margin decreased by 0.7 percentage point compared to the same period last year.
If we break down the growth margin decline, the most significant decline occurred in the tires and the chassis parts segment. Further analysis shows that this year, tire category demand was intermittently suppressed by geopolitical policy impacts on foreign trade, and the overcapacity expansion in the industry over the past few years led to excess supply. We also continuously adjust our product portfolio, increase the self-proprietary product. The pressure on price can be offset. But still, we see tire business suffer from the pressure. We also see the CN guidance prices for tire in China were actively reduced significantly by leading tire companies. We mitigated most of the price impact by adjusting our product mix and increasing the proportion of self-controlled products is still insufficient to fully offset the pressure on growth margin.
The same trend was observed in several major categories within the maintenance segment, such as oil products, although the CN guidance price decline was more moderate compared to the tire segment. Moreover, certain subcategories within maintenance, such as quick repair items and batteries, were relatively unaffected by the downward trend on unit price or the impact of the fully offset through our operational efforts, resulting in a better overall growth margin trend for the maintenance segment compared to tire and chassis business. Other automotive products and service segments saw significant improvement driven by enhanced growth margin in innovative business such as car wash, beauty, deep beauty, and the car products making a positive contribution to the company's overall growth margin.
The auto part Qipelong segment benefited from continuous optimization of internal sub-segment revenue structure and the continued reduction of a low-margin wholesale business, coupled with improved profit margin in the extended procurement business. The overall segment growth margin continued the multi-year trend, increasing sharply by 380 basis point year-on-year to 21.5%. Meanwhile, driven by sustained store profitability, growth in advertising revenue, and structural improvement in innovative business, the growth margin for advertising, franchisee, and other services also increased significantly year-on-year. On the operating expenses side, to better compare actual investments in each category, we excluded ESOP-related costs included in each expense item and used adjusted figures for comparison. In the first half of this year, the overall total operating expense ratio continued to improve. However, due to the company's strategic investment directions, the adjustments in different expense categories varied in directions and in magnitude.
The adjusted comprehensive operating expense ratio, which represents the sum of the four expense items as a percentage of revenue, further decreased to 22.4%, down slightly by 10 basis points compared to the same period last year. The adjusted selling and marketing expense ratio increased slightly year-on-year, mainly due to stronger incentive for franchisees, technicians, and consumers, combined with promoted subsidies during the 618 sales event. Corresponding marketing expenses increased 20.1% year-on-year, rising this ratio to revenue by 0.6 percentage point. However, thanks to optimization in logistics fulfillment, especially warehouse rent and labor, the reduction of fulfillment costs largely offset the increase in marketing expense, resulting in a limited rise in the overall selling and the marketing expense ratio. You can see that's about the logistics.
In terms of the R&D, since the second half of last year, we increased investment in AI infrastructure and personnel. Some of these infrastructure and personnel costs were fully reflected in expenses in the first half of this year, leading to a slight increase in the adjusted R&D expense ratio. We believe such investments are necessary under current technological trends and will bring greater long-term value to business growth and refined management. Also, in the long term, we see such investment will be a very good thing for our overall growth. Aside from these two expenses items, the ratios of operations and the support and general and administrative expenses to revenue continued to decline, collectively decreasing by approximately 0.4%.
Considering both gross margin and expense trends in a challenging industry environment, the company achieved a stable profit growth, with the non-IFRS net profit margin further rising to approximately 5.2% in the first half of the year. Benefiting from the completion of investment phase in logistics infrastructure such as automated warehouse over the past few years, our capital expenditure began to decrease. Although we simultaneously increased investment in AI infrastructure, company's free cash flow further grew year-on-year in the first half, rising by over 30% compared to the same period last year. We see in the past three to four years of investment, this year is approaching the end of the overall automation efforts for this year. Since the second half of last year, we started to invest more in AI. But you see from the chart, it has only limited influence on our free cash flow.
Just like I mentioned, the free cash flow rising by over 30% compared to the same period last year. This drove our total cash reserves up to RMB 7.5 billion, making our cash holdings the highest in the industry. Our strategic judgment is that in the current industry downturn, high cash reserve provides a sufficient safety cushion, while also giving us greater strategic flexibilities and growth options. Okay, that's the end for the financial performance.