Ladies and gentlemen, welcome to the 2025 annual result conference for investors and analysts of Tuhu. This conference will consist of two sessions, management remarks and a Q&A session. During the management remarks, all participants will be in listen-only mode. Once the Q&A session commences, you may raise your hand to ask questions via the telephone keypad or the online platform. I will now hand over to Mr. Chen Zhe, Company Secretary and Director of Investor Relations at Tuhu. Mr. Chen, the floor is yours.
Thank you. Dear investors, analysts, and friends from the capital markets, good evening. Thank you for joining 2025 annual result conference for investors and analysts of Tuhu. I am Chen Zhe, the Company Secretary and Head of Investor Relations. The conference is being conducted via remote conference call. Let me introduce the management team joining us today.
Mr. Chen Min, Chairman of the Board and Chief Executive Officer of Tuhu, and Mr. Zhang Zhisong, Chief Financial Officer of Tuhu. Before we officially start, please carefully read the disclaimer on the screen. By participating in this presentation or reviewing these materials, all attendees are deemed to have agreed to the restrictions and terms set forth in the disclaimer. The conference will be conducted with simultaneous presentation interpretation in English. Participants joining via phone may press asterisk plus 4 to switch to English channel, while those attending online can click globe icon on the screen to select their preferred language. The meeting will consist of four parts. Mr. Chen Min will first provide an overview of the company's business performance. Next, Zhang Zhisong will review the company's overall financial performance and highlights for 2025. Then we will reserve time for management to answer questions from investors, analysts.
If you wish to ask a question, please click the raise hand button in the conference system. Participants joining by phone can press asterisk plus one to raise your hands. Now, I will give the floor to Mr. Chen Min, Chairman of the Board and Chief Executive Officer, to share with us the company's operational status and business progress for 2025. Mr. Chen, please.
Hello, everyone. I am Chen Min. Thank you for joining our conference call. In 2025, China's automotive service market continued the industry theme of deep consolidation and structural evolution. On the demand side, user needs continue to diverge. Online, offline penetration accelerated. On the supply side, we witnessed traditional automotive service providers accelerating their exit under the combined pressure of macro environment and shifting user behaviors, with user market rapidly concentrating towards independent chain platforms equipped with scale, standardization, and digital capabilities.
With rapid iteration in both automotive technology and artificial intelligence, higher development requirements are being placed on leading players. They not only need a solid infrastructure and an efficient, orderly fulfillment service system, but also require cutting-edge technology, insight, and R&D innovation. In 2025, we focused on enhancing the service experience and the value for car owners throughout their life cycle. We leveraged the platform scale, product refinement, systemic data capability, supply chain integration efficiency, and nationwide offline service network. We continue to strengthen our competitive edge. Let us take a look at 2025's data. As of the end of 2025, our global number of Tuhu Auto Service stores exceeded 8,000 for the first time. We leverage the scale advantage. Our Auto Service store system ranked first globally in terms of the number of automotive service stores managed.
Based on the total online and offline GMV for 2025, we also ranked first in China's automotive service market for the first time, achieving a milestone where an independent third-party brand surpassed the authorized system in automotive service transaction scale. In terms of user scale, our annual transacting users have ranked first in China for many consecutive years, making us the largest online and offline vertical entry point for automotive service users in China. In terms of the financial service performance, our operating revenue reached CNY 16.46 billion, a year-on-year increase of 11.5%, continuing the double-digit revenue growth momentum from the first half of the year and accelerating compared to the same period in 2025.
As of the end of 2025, the total number of registered users on our platform reached 160 million, with an omni-channel annual transacting user reaching 28.4 million, a year-on-year increase of 17.7%, further consolidating and expanding our leading advantage. The proportion of NEV transacting users increased to 15% in 2025, a year-on-year increase of 3.8 percentage points. Also, we maintained the profit growth because of the unit price that we adjusted. Our financial performance is very stable. Even though we have a very large amount of stock repurchase, we have reached the book revenue of CNY 8.29 billion, which provides sufficient guarantee for our store operation. In 2025, we achieved a net increase of 1,134 Tuhu Automotive Service stores for the full year, with store expansion returning to a recent high.
By the end of the year, the global number of Tuhu Automotive Service stores reached 8,008, of which six have been operating in Hong Kong and Southeast Asia. In mainland China, the proportion of our stores located in second-tier and below cities reached 59%, further improving the regional coverage of our Tuhu Automotive Service store network. While expanding continuously, our store network has maintained a healthy, stable development. In December 2025, the overall profitability rate of Tuhu Automotive Service stores that had been open for more than six months reached 90%. In 2025, the total number of stores in the industry continued to decline, with stale capacity accelerating its exit and a large number of independent stores leaving the market.
According to industry reports, chain stores were the only participants in the industry to achieve growth in both store counts and market share during this year, with their share increasing significantly from 16% in 2020 to 34% in 2025. The entire industry is rapidly consolidating towards a standardized chain system. On the demand side, the overall transaction scale of the automotive service market continued to grow steadily. We also see the online penetration rate of the automotive service market has steadily increased from 9% in 2020 to 14% in 2025, validating our forward-looking judgment about the industry's development 15 years ago. Influenced by multiple factors such as macroeconomics and changes in consumption structure, user pursuit of value for money and recognition of domestic brands have become increasingly prominent in recent years.
Data show that from 2020 to 2025, the market share of our domestic brands has been continuously increasing among the main consumer categories in the automotive service market. In 2025, the average store traffic in the automotive service industry remained under pressure according to the data from a consulting firm. The average number of vehicles served per independent store decreased by approximately 5% year-on-year, highlighting the severe survival challenges that traditional industry participants continue to face. Despite the challenge, we maintained rapid business scale growth, stable profitability in our store network, and a steady improvement in the same-store performance. Let's take a look at the business progress. In terms of fund operation and brand building, we've always adhered to professional content creation and service delivery. We continuously educate the public on automotive expertise, constantly strengthening the user awareness of genuine products and professional understanding of automobiles.
We collaborate with Tuhu's professional image ambassador, Mr. Han Han, to launch Han Han Says, a series of educational short videos continuously sharing professional car maintenance knowledge with users. We carefully curated special columns such as Industry Expert Talks, Extreme Challenges, and Global Sourcing on our official accounts, covering areas like expert knowledge-sharing products, performance limit testing, and global parts production tracing. Our car owners gain a more comprehensive understanding of vehicles and product performance. We further deepened our collaboration with automotive institutions like the China Automotive Technology and Research Center, continuously improving our systemic product evaluation framework, striving to provide users with trustworthy quality certification throughout world-level testing. We also deepened omni-channel operation. By improving the coverage of detailed vehicle model specifications, enriching product offerings across different price points, we have also seen intelligent search and recommendation logic being used.
This drove a nearly 12% year-on-year increase in Tuhu's app payment conversion rate in 2025. We continued in-depth cooperation with third-party platforms through initiatives on channels like Douyin and Meituan, such as building an employee self-media matrix, co-creating promotional content, developing channel-specific products, and integrating service infrastructure. We effectively drove 150% year-on-year increase in new transacting users for Tuhu on Douyin channel in 2025. As of the end of 2025, Tuhu's unaided brand awareness rate climbed to 63.7%, 17.3% higher than the second-ranked brand, and its top-of-mind awareness rate reached 142.8%, surpassing the second-ranked brand by 29.9%. Our user scale also continued to grow rapidly in 2025. Our app's average monthly active users reached 13.8 million, with omni-channel annual transacting users reaching 28.4 million. Meanwhile, our annual repurchase rate among transacting users increased to 65%, year-on-year improvement of 2.7%, fully demonstrating users' strong recognition and long-term trust in Tuhu brand.
In terms of store development in 2025, we further deepened the coverage breadth and layout depth of our Tuhu Auto Service store network in 2025. The number of new stores we opened in mainland China reached 1,438 for the full year, setting a new historic record. As of the end of the year, we had 8,002 Tuhu Automotive stores in mainland China, spanning 31 provincial-level administrative divisions to 324 prefectural-level administrative divisions and 1,953 county-level administrative divisions. We further deepened network in 2025. The number of stores in Beijing successfully exceeded 300, making it the second city in China to surpass 300 stores in a single city. In leading provinces like Guangdong and Jiangsu, the annual increase in stores exceeded 100 in each province. Our development in mature regions continued to maintain strong growth momentum, driving the local user penetration rate higher.
We continuously improve the regional balance of our nationwide store network in Northeast and Northwest region, where our base was previously relatively weaker. Tuhu Automotive Service store also developed rapidly in 2025. The average number of our stores in these two wing provinces grew by over 30% year-on-year. Alongside, our penetration strategy has also shown successful results. We see by the end of 2025, our coverage of county level cities with over 20,000 passenger vehicle nationwide, it reached a 75% year-on-year increase of really large level. The balance and comprehensiveness of Tuhu store regional layout continued to improve. As the first stop of our overseas pilot, we have previously established two self-operated Tuhu Automotive Service in Hong Kong market. Building on this, in 2025, we opened one new franchise stores, each on Hong Kong and also Kowloon.
While steadily expanding the local network layout, we also successfully exported the franchisee store model overseas, promoting the further maturity of our regional business operation system. In November last year, our two Tuhu franchise stores in Kuala Lumpur region of Malaysia officially opened for the business. After launch, the new stores received an enthusiastic market response, with booming orders quickly sparking strong interest from local operators to join the franchises. We believe that standardized, transparent, professional, reliable, and high value for money automotive service hold universal value that transcends market. We hope that in the future, we can bring the mature experience accumulated by Tuhu over many years of deeply cultivation in China. We hope to have more overseas markets covered by Tuhu. While the network expanded rapidly, constantly ensuring store quality has always been our top priority.
We introduced a series of operational measures to help stores strengthen management and enhance capabilities, ensuring the steady improvement of offline service quality. Also, the comprehensive support for new stores development drove a significant improvement in profitability rate of new stores within six months compared to 2024. We also, in the second half of the year, expanded the scope of specialized support to all technical service stores. We established a professional technical supervision team to conduct nationwide store visits and provide assistance. We also further enriched our knowledge base system, adding installation guide and service procedures for various service items with particularly rapid follow-up to cover a large number of NEV models. We launched intelligent recommendation function on Tuhu merchant app used by technicians, providing them with precise suggestions based on the profile of the vehicle in the store and issue detected.
We continue to strengthen the management of service process standardization, improve the efficiency of service inspection and expand the scope of inspection. The total number of the quality inspection checks related to store service standards increased 191% year-on-year in 2025. We also further increased the positive incentives and the support for store and technicians. In 2025, total amount invested in various incentive bonuses distributed to stores and technicians was nearly CNY 13 million . In 2025, user satisfaction with Tuhu Automotive Service store increased by 4.4 percentage point year-on-year, fully improving the effectiveness of our store operation management system. While many industry peers rushed forward blindly pursuing speed, we constantly upheld and defend industry service quality and standards. In terms of products and services, we continued to strive for excellency in core business like tire and maintenance.
We upgrade product competitiveness and optimize product metrics coverage through dual track strategy of domestic brands breaking upwards, international brands taking roots downwards. We deeply catered to the tier needs of different users. Through our self-owned and self-controlled product strategy, we quickly added high value for money product to meet growing market demands. In the mid to lower price segment, we launched several new brands like Great Wall, Shenyi, and Laufenn, which achieved rapid sales to volume soon after launch. For users with high requirements, we also introduced upgraded product series within existing high-end and mid-end brands, effectively driving faster sale growth for the tire from international brands like Michelin, domestic brand like Dongfeng, Victory and operating user segments, and implementing differentiated pricing in lower tier markets.
The continued expansion of store coverage, combined with ongoing upgrades in refined operations, drove significant year-on-year increase of approximately 53% and 60% in online paying users and orders for the light auto beauty business in 2025. The average annual consumption frequency of light auto beauty user also increased by about 5% year-on-year. The year-on-year growth of online orders for upgraded light auto beauty service exceeded 80%. The cross-repurchase rate for new users switching to other services within 12 months remained stable at 40%. In terms of the deep detailing and beauty service, on the product side, leveraging our self-owned and self-controlled brand system, we comprehensively upgraded the performance of our products, resulting in continuous increase in the revenue share of our self-owned and self-controlled brands in deep auto beauty products. We see the increase was particularly significant in mid to high-end products, reaching 14 percentage point.
This drove a year-on-year decrease of approximately 20% in the number of complaints per 10,000 orders for the deep auto beauty business in 2025 because we launched a certification system for film installation technician. The deep auto beauty business has not only achieved high-quality development. Among deep beauty users, new car owners account for about 40%, NEV users account for about 30%, effective broadening our customer base and laying a foundation for the long-term business expansion. In 2025, we continued our effort across three dimensions of people, products, and platform, continuously improved the product supply chain, increased user conversion, boosted service capability. For our 10 core categories, we keep enriched supply and price selection. We drove an approximately five percentage point improvement in online search availability rate for compatible parts and approximately seven percentage point improvement in availability rate of parts identified as abnormal during in-store inspection in 2025.
We also cover over 100 categories and 10,000 of SKUs, more comprehensively meeting market and user demand. We optimize recommendation strategy and upgrade sales formats. Offline, we consistently refined the push system for in-store inspection and developed the new system tools to improve inspection quality and anomalies. We also improved the technician certification system, strengthened the requirement for the proportion of intermediate and senior technician with the system. We increased the service availability rate for core fast repair category at offline stores to 99.3%. We customized daily fast repair examination content on our Lanhu app to continuously strengthen the professional sales. We also help store develop comprehensive service capabilities. With all these measures, our fast repair business maintained rapid growth.
Revenue from faster repair service, which was deeply covered by Tuhu supply chain and managed under standardized procedure, increased by over 50% year-on-year, with offline growth reaching as high as 70%. As Tuhu's faster repair business capability deepened, the proportion of GMV from self-procured fast repair parts at store decreased by 3 percentage points year-on-year, while the contribution of the fast repair business to store average daily revenue increased by 1 percentage point year-on-year. In terms of NEV, we also achieved great growth. In 2025, the NEV transacting user grew rapidly to approximately 4.3 million , with their share of platform transacting user correspondingly increased to 15%, constantly exceeding the industry NEV passenger vehicle to ownership penetration rate. Around tire, fluid part, and auto beauty, we continuously added NEV-specific products and service, constantly optimizing product portfolio to meet the differentiated needs of NEV owners.
In NEV specialized rapid repair field, we continuously built core technical capabilities and deepened our supply chain layout. By the end of 2025, the number of stores capable of offering NEV-specific repair service reached 120, including two comprehensive NEV technology centers. To address the growing demand of our out-of-warranty repair, we launched over 1,000 specialized repair programs for the main and auxiliary triple electric system and the high voltage components of mainstream models. For the out-of-warranty hybrid batteries, we introduced original equipment suppliers for the first time, while continuing to collaborate with well-known national manufacturers upstream to co-develop NEV specific parts. We laid a solid foundation because of all these efforts. The stable development of our various business relies on efficient support for our nationwide warehouse network and logistics supply chain system. In 2025, the number of our regional warehouse nationwide reached 31.
Despite warehouse air increasing by only 6 percentage points year-on-year, we achieved a year-on-year capacity increase for over 20% through the upgrade to automotive storage and retrieval system and optimization of utilization. The number of our forward warehouse also increased to 738, with coverage to whole auto service stores improving by 4 percentage points year-on-year, effectively supporting the nationwide expansion of our store network. We constantly adhere to using algorithm and technology to drive cost reduction and efficiency improvement by optimizing warehouse network distribution, implementing intelligent stocking and inventory allocation, and increasing investment in automation and smart equipment. We comprehensively improved warehouse network efficiency and reasonably optimized the cost. The rate of same-day, next-day delivery for orders from regional warehouse increased by 4 percentage points to 83%. The delivery rate for forward warehouse remained stable at a high level of 98%, while timeliness and experience continued to improve.
The overall fulfillment expense ratio decreased by 0.5 percentage points year-on-year to 4%. This fully demonstrates the core advantage of our warehouse network and supply chain system, providing solid support for the continued expansion of various business. Guangzhou automated tire warehouse has been completed and fully put into operation. It is very stable in operation. Automated warehouse storage revenue per square meter improved by 2.7 times compared to traditional manual warehouse. After achieving full automation in conveying, sorting, palletizing, and the picking process, the operating cost per unit decreased by 65% compared to manual operation, demonstrating significant cost reduction. In terms of timeliness and stability, the warehouse daily outbound order timeliness rate has constantly maintained at [inaudible]. Since the launch, the warehouse logistic-related customer complaints have decreased by 70% year-on-year, reflecting stable and reliable service quality.
The warehouse performed exceptionally well during last year's Double 11 shopping festival, with a peak daily outbound volume reached 42,000 units, demonstrating strong fulfillment capability under peak season, with a peak outbound volume increase by approximately 30% compared to previous year. This is a new tool for us to realize our mission to make the maintenance easier. We are very happy to see the technology wave swept across the industry, and we're also delighted to see the iteration and advancement of our new technology in 2025. We launched an upgrade initiative to deeply integrate AI technology with our core business. On the user side, we use AI to upgrade and reconstruct the user service interaction experience. AI agent for pre-sales, intelligent shopping assistance, and in-sale after-sales service has been improved to enhance the multi-model understanding and dynamic business tool invocation.
These allow users to continuously use our app with better experience. We also launched an AI car assistant within TUHU Car app, provide car owners with a personalized maintenance suggestion. We promote the upgrading of a standardized store management through the application of multi-model AI technology. We launch application function, for example, intelligence store hygiene inspection, fire and equipment status recognition, and work bay occupancy status recognition through a large image model to increase the quality requirements for inspection photo uploaded by technicians during offline service process, further improving standardization management. We optimize stocking and inventory allocation decision through algorithmic models, effectively improving our warehouse network turnover efficiency. We initiate technology pilot for unmanned delivery, exploring new opportunities for future delivery efficiency. We also leverage AI tools to assist in cost reduction. On the R&D front, the adoption rate of AI coding in front and back-end development has reached 33%.
On the marketing front, we have also widely used AIGC content. Currently, AIGC accounts for 90% of in-app banners and over 30% of out-of-app promotional materials. We are still at infancy stage in terms of AI use. In the future, we will continue to increase technology investment to promote application of new technology in more scenarios and contribute greater strength to achieve intelligent upgrading of the industry. We also actively practice environment, social responsibility, and corporate governance concepts, committing to creating greater social value in 2025. We increased the support for youth entrepreneurship program, providing entrepreneurship subsidy to over 150 young individuals through the Youth Automotive Service Talent Entrepreneurship Support Program. By the end of 2025, TUHU workshop store has already provided job opportunities for over 169 stores out of all our stores.
Subsequently, stores in Shenzhen, Foshan, and other cities were also included in the worry-free consumption commitment units, as in Guangdong Province. We also actively responded to the national policy by cooperating with multiple local governments, such as Haikou, to launch trade-in subsidy activities, providing tangible benefits to consumers. We place great emphasis on standardized waste recycling. In 2025, self-operated TUHU auto service stores collected and transferred for recycling approximately 1.2 million liters of engine oil, 300,000 tires, and 6,000 batteries. In logistics and delivery, we replaced over 70% of vehicles on our self-operated routes with new energy vehicles. Through initiatives such as optimizing packaging recommendations, promoting reusable packaging boxes, and increasing investment in automation equipment, we achieved a significant reduction in consumables usage and energy consumption per unit. A giant tree grows from many tiny sprout. Automotive service is a long cycle execution happy track.
Only through continuous investment and aesthetic work, can we accumulate trust over time and solidify value amidst the change.
Thank you very much for your introduction. Now, let's welcome our CFO, Mr. Zhang Zhisong, to report our financial performance in 2025.
As Chen Min mentioned earlier, despite the significant downward pressure on the industry this year, with low overall industry sentiments and many peers in traditional business model facing severe challenges, our financial performance for the full year shows we offset most of the industry's downward pressure through sustained efficient customer acquisition, rapid store expansion, and refined operational strategies. Looking at our annual transaction user and store account, the current competitive environment has not fundamentally impacted our foundation.
In terms of transacting users, the number of 2025, the number of transacting users increased by 17.7% compared to the same period last year, rising from 24.1 million last year to 28.4 million. This growth was achieved despite the fact that 2026 Chinese New Year holiday occurred later than 2025, which deferred some user transactions. The number of store increases significantly in 2025. The actual number of new store opened for the full year exceeded 1,400, with a net increase of 1,130 stores for the year, representing 16% growth rate, faster than last year's net store growth rate. This was also achieved against the backdrop of a larger store base at the end of 2025.
Contribution to net new store came mainly from the second half of 2025, with approximately two-thirds of the net increase occurring in the second half, consistent with our characteristic of typically opening more stores in the second half than the first half. Looking at city distribution of stores, our store share in third tier and below markets further expanded in second half of 2025. Our total revenue increased by 11.5% year-on-year, reaching CNY 16.46 billion. The growth rate was faster than that of same period last year in the first half of 2025, primarily benefiting from our more proactive, effective growth operation strategy in the second half 2025. Each business segment generally maintained the growth trend since the first half of 2025, except a year-on-year decline in new business revenue due to business structure change. All core business segment achieved year-on-year growth for the full year.
Among them, the two segments with the largest revenue contribution, tire and chassis part, grew at approximately 12.6 % while the auto maintenance segment grew at 11.3%. Although the maintenance segment grew faster than the tire and the chassis part segment in the first half of the year, tire benefited from trade-in and a government subsidy measured in the second half, ultimately outpacing the maintenance segment's growth for the full year. No matter for the tire maintenance, both faced a greater downward pressure on average transaction value for the same period, especially general products, compared to the first half of the year. However, thanks to the high growth order volume and a strong growth in some fast repair category under the maintenance segment, both still maintain double-digit revenue growth.
In terms of growth performance, the fastest growing segment in 2025 remained the other automotive products and service segment, primarily driven by significant growth in the car wash and detailing business segment. Growth rate in the second half of the year was slightly lower compared to the first half due to the high base effect from the car wash and detailing business in the second half of 2025, but still contributed a 12.8% growth rate for the full year. The Qipeilong business segment benefited from the expansion of our instant delivery service categories, particularly the rapid development of fast repair business, the increased density of a forward warehouse layout in the mid to low tier city, and enhanced management of externally sourced goods in stores in core regions.
However, our continued reduction in the traditional Qipeilong distribution business partially offset overall growth of the Qipeilong business, resulting in a 6.3% growth for the integrated Qipeilong business for the full year. Revenue from advertising, franchising, and other service segment increased 12.4 % year-on-year. Within this, the revenue from the franchise service grew by 11.3%, mainly driven by increased management fees and a profit sharing resulting from store expansions throughout the year, especially in the second half. Advertising revenue grew by about 67% year-on-year. This was partially due to the increasing influence of our brand, leading partners to allocate more advertising budget to our platform and partially reflected the significant growth pressure in the upstream industry, making partners more inclined to allocate spending to platforms that can deliver substantial incremental value.
In terms of the gross profit, partially affected by the high base in 2024, gross profit for several categories declined since entering the second half of 2025. We proactively took measures to enhance product value for money during several key shopping festivals, sharing the cost reduction benefit achieved on the procurement side for several major categories with our users. At the same time, the user reduction by leading brands in the industry led to a general decline in price for general products in tire and maintenance category, reaching high single digit or even double digit. As a result, company's overall gross profit margin for the full year decreased by approximately 1.3 percentage points compared to the same period in 2025.
Several major categories within the maintenance segment, such as engine oil, experienced increased quarter-on-quarter price reduction pressure in the second half of the year, leading to a decline in the overall gross profit margin for the maintenance segment. Some subcategory within the maintenance segment, such as the fast repair items and batteries, were only slightly affected by the downward trend in ATV, partially offsetting the impact of a decline in oil product ATV. Other automotive products and service segment continued the long-term trend observed over the past several years, driven by gross profit improvement in innovative business such as car wash and detailing, deep auto beauty, and car accessories. This segment showed further significant improvement, contributing positively to company's overall gross margin.
The Qipeilong business benefited from the continuous optimization of its internal sub-segment revenue structure against the backdrop of ongoing reduction in the scale of its low margin wholesale distribution business. Overall segment's gross profit margin continued the trend seen in previous reporting period, increasing significantly by 390 basis points year-on-year to 23% for the full year. At the same time, driven by sustained store profitability, growth in advertisement, structure improvement, innovation business gross profit margin for advertising, franchising, and other service revenue also increased significantly year-on-year. On the operating side, looking at adjusted expenses, the total operating expense ratio for the full year, the ratio of the total adjusted expense to revenue decreased both year-on-year and subsequently compared to the first half.
The overall total operating expense ratio continued to improve, decreasing by 90 basis points compared to 2025 to 21.8 percentage points, which is largely in line with management previous expectation against the backdrop of industry pressure this year, except for R&D expenses, which saw a slight increase of 10 basis points compared to 2024 due to controllable upfront capital expenditure from new technology application and personnel restructuring. Operating and supporting expense remained stable. The ratio of selling and marketing expense and general administrative expense to revenue both further declined. What's worth mentioning is, although we increased subsidies for consumer this year, compounded by various promotional subsidy in the second half, based on our strict ROI control requirement, the absolute value for our full year advertising spend remained essentially flat compared to last year, with its ratio to revenue decreased by 0.4%.
Additionally, the logistic fulfillment cost saw their ratio to revenue decrease by 0.5 percentage points year on year, driven by efficiency gain from warehouse network optimization and the deployment of the automation equipment. This contributed to an overall reduction of approximately 0.9 percentage points in the ratio of total sale marketing expense to revenue. On the R&D expense side, since last year, we have placed a great emphasis on the effective application of a new technology in our scenario. To this end, we increased investment in AI technology infrastructure and team capability building. The associated infrastructure and personnel costs lead to a certain increase in R&D expense this year. However, we believe such investment is necessary under the current technology development trend and will bring greater value to the company's business growth and refined management in the long term.
The company will continue to invest steadfastly on the basis of strict total expense control and ensuring the verifiable value of application scenarios. Apart from the two expense items mentioned above, the operating and support expense ratio remained stable, while the general administrative expense ratio continued its downward trend. Considering the company's gross profit trends and expense trends for the full year, we maintain stable growth at the profit level. The first half of the year saw good year-on-year profit margin improvement, but due to the high base effect and the intensified ATV pressure in the second half, the full year and non-IFRS net profit margin remained essentially flat with a slight increase compared to last year. Our refined operation over the past year are also reflected in the management of various business activities affecting the company's operation and free cash flow. Our cash conversion cycle remained at 62 days.
Meanwhile, along with the extension of sales revenue, we generated strong operation cash inflow. Currently, the commissioning of a Guangzhou automated tire warehouse marked the final phase of the high logistic facility capital expenditure cycle we started in 2020. Apart from capital expenditure related to daily operations such as store opening and renovation, the newly added R&D related capital expenditure, large non-recurring capital expenditure have decreased for several consecutive years, providing the company with more free cash flow. As of the end of December 31, 2025, our total funds, including cash and cash equivalent, restricted cash and various wealth management products, further increased. This was achieved despite the company spending over CNY 500 million on share repurchase throughout the year. We plan to utilize these reserves appropriately in the future to maximize return from the perspective of executing long-term strategies to provide shareholder return.
Thank you very much for your sharing.