Ladies and gentlemen, thank you for standing by and welcome to Uxin's Earnings Conference Call for the first quarter of fiscal year 2023. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question-and-answer session. If you wish to ask a question, please press the star key followed by the number 1 on your telephone keypad. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I'd now like to turn the call over to your host for today's conference call, Ms. Joyce Tang, IR Director of the company. Please go ahead, ma'am.
Thank you, Operator. Hello, everyone. Welcome to Uxin's Earnings Conference Call for the quarter ending June 30, 2022. On the call today are DK, founder and CEO, and Feng Lin, CFO. DK will review business operations and company highlights, followed by John, who will discuss financials and guidance. They will both be available to answer your questions during the Q&A session that follows. Before we start, I would like to remind you that this call may contain forward-looking statements made under the safe harbor provision of the US Private Securities Litigation Reform Act of 1995. These statements are based on management's current knowledge and assumptions about future events that involve known or unknown risks and uncertainties, which could cause actual results to differ materially from those in the forward-looking statements. Uxin does not take any obligations to update any forward-looking statements except as required under applicable law.
For more information about the potential risks and uncertainties, please refer to our filings with the SEC. With that, I will now turn the call over to our CEO, Kun Dai. Please go ahead.
Thank you, Joyce.
Hello, everyone. Thank you for joining our earnings conference call today. To better communicate with both domestic and international investors, my prepared remarks today will still be in both English. In the first quarter of fiscal year 2023, which was from April to June 2022, we maintained our growth momentum despite repeat COVID resurgence across the nation. Our retail sales volume increased by 30% quarter-over-quarter and more than 250% year-over-year to 2,407 units. We continue to gain trust among consumers with our high-quality vehicles, efficient processes, transparent pricing, and reliable services. We also continue to expand our market share leadership in both Xi'an City and Hefei City, where our two IRCs are located.
The two IRCs are the largest 100% self-owned used car dealership stores in East China and Northwest China respectively. Our regional branding and customer reputation have been growing rapidly. In this quarter, our Net Promoter Score was 60, remaining stable at an industry top level. Customer reputation through word-of-mouth recommendations started to fuel our business growth. About 25% of our retail sales in the quarter were generated from customer referrals. We refined our over 700 inspection checkpoints and launched our National Standard Vehicle Dashboard program based on national used car appraisal and evaluation standards. The program further improves our customers' shopping experience. It has the presentation of retail vehicle information in a more accurate and intuitive way, and helps our customers make their decisions more easily and conveniently. Each retail vehicle is provided with a percentile score based on detailed, yet easy-to-understand information on vehicle conditions.
我们将一车一况的复杂信息以标准化、图形化的方式输出给消费者，有效提升消费者对真实车况的感知，加快购车决策，提升购买体验。
Consumers can see our categorical ratings for each retail vehicle, including grades for the exterior appearance, engine compartments, cockpit, emission tests, road tests, chassis and et cetera. Instead of a highly complex report, we use simplified, standardized, and visualized ways to tell our customers the pros and cons of the cars and their price savings. As such, our customers can understand the car easily, make comparisons easily, and make purchase decisions easily. The program is very well received by our customers.
运营方面，我们业务全流程的运营效率不断提高。如今我们零售车辆的上架时效比一年前提高了50%，零售销售周期缩短了48%。我们还需要更快的入仓效率、准备效率、销售上架效率和销售效率，交付效率要持续不断地去改善。
In this quarter, our operation efficiency continued to improve across the whole business process. For example, the reconditioning time from vehicle acquisition to listing for sale is reduced by about 50%. We also reduced our retail turnover days by about 48% compared to one year ago. Going forward, we will be faster and faster in warehousing, reconditioning, listing, selling and shipping, et cetera. This will be our relative focus.
近期，中国商务部等十七个部委密集发布和落地多项二手车行业的利好政策，继增值税减征、电子化档案便利、异地交易等措施后，全国范围内的国五排放标准的二手车限迁问题也已经全面取消，二手车商品属性问题也得到了解决。这不仅将进一步规范和简化二手车流程，促进二手车的高效流通，还将降低企业成本，提高融资便利性。至此，过去十几年里阻碍二手车流通的堵点、断点将全面打通。
The Ministry of Commerce and 15 other relevant departments have been actively implementing a series of business and tax-oriented supportive policies to boost the used car industry in China. Following previous measures to reduce the value-added tax rates and digitize vehicle registration nationwide, the regulators have completely lifted restrictions on cross-regional circulation of used cars with National V emission standard or above. The accounting method and tax treatments have also been modified to promote self-owning business models from commission-based agency models. All these policies will significantly help streamline used car transaction processes, promote efficient circulation, reduce operation costs, and facilitate working capital financing. Finally, all major obstacles that have been hindering used car industry development in the past decades have been completely removed.
从明年开始，国家对二手车交易主体的规范措施也将全面开始实施，引导行业以法企业法人主体的形式经营二手车业务。二手车市场将告别小、散、乱、弱的个人经济模式时代，向规范化和规模化的品牌经销商模式发展。在这新的发展机遇中，信任、品质、服务将构建二手车行业最重要的发展基础，这也是优信作为行业的领军企业一直在努力推行的行业健康发展方向。
Starting from next year, the state regulators will begin strengthening oversight of used car operations, requiring all dealerships to operate as compliant legal enterprises instead of running the business as individuals. This will mark the gradual ending of the small sized, highly fragmented, unlicensed and franchise business operations, which are currently dominating the used car industry in China. These policies signify that well-branded, scalable and compliant used vehicle companies will thrive and become major market players. As new opportunities emerge, we believe that customer trust, vehicle quality and service capabilities, which we have been consistently pursuing as our fundamental principles, will be the most important foundation for the future growth of the used car industry in China. Uxin as a used car business leaders in China, will benefit from this favorable policies and sustain our high quality growth on the back of the industry tailwinds.
2022年9月9号，我们迎来了优信的十一岁生日。回顾过去这一年，我们在管理系统建设、供应链流程打磨、产品服务优化等各个方面都打下了扎实的基础，并不断进步。优信已经为下一阶段的发展完全做好了准备。
We celebrated Uxin's 11th anniversary this year on September 9th. I'm pleased to see that we have built a solid foundation with continuous improvement in all business aspects over the past years. Our transformative upgrades to management systems, supply chain processes, as well as product and service quality, will set the stage for our next phase of growth.
我们预计在2023财年，优信的零售销量会持续保持增长。西安仓即便扩容，合肥仓也会保持满仓运行。合肥长丰工厂也正在如火如荼的建设过程中。我们的各项业务规划都在稳步地推进中。
Looking ahead into the fiscal year 2023, we expect our retail sales will continue to grow each quarter. Our Xi'an IRC site will extend to a much larger size. Our Hefei IRC will continue to operate at its full capacity. At the same time, the construction of the Hefei IRC co-invested by us and the Hefei City is currently in full swing. All of our business plans have been making steady progress.
我们是一家长期主义的公司，我们将坚持为顾客提供好品质的车辆，创造好的体验和提供满意的服务，坚持以口碑推动高质量的增长，为股东带来长期的回报。好，我的发言到这里，那下面有请我们的CFO John，谢谢。
Our sights are set on the long term. We are committed to providing high-quality vehicles, creating a superior shopping experience, and offering satisfactory services to our customers. We are confident that our dedication to customer reputation will drive sustainable, high quality business growth and ultimately generate long-term returns for our shareholders. I will pass the call to my CFO, Feng Lin, please.
感谢DK。大家好，因为同时有国内和国外的投资者参会，为了更方便和大家交流，我们这次会同时用中文和英文与大家分享公司二零二三财年第一季度的业绩，也就是二零二二年四至六月份的财务情况。Thanks, DK. Hello, everyone. Welcome to our earnings call for the first quarter of fiscal year 2023, which is the three months ended June 30, 2022.
Since we have international and domestic audiences on the call, we will walk you through our key financial results in both English and Chinese。受益于本季度总销量环比增加29%，本季度总收入为6.26亿人民币，环比增加23.8%，同比增长125%。其中零售收入3.48亿人民币，环比增长9%，同比增长279%。本季度零售销量环比增长30%，是零售收入增长的主要驱动。同时，公司在主动地调整库存结构，持续增加符合更广泛需求的中等价格的车辆比例。本季度平均单车的售价从上一季度的18万元人民币降低到本季度的14.5万人民币。下个季度预计会降低到11.8万人民币，并开始保持稳定。单车平均售价的降低虽然稍微降低了收入增长的速度，但是回归到合理的库存车价水平，会对长期健康的业务增长打下更扎实的基础。
Driven by a 29% quarter-over-quarter growth in our overall transaction volumes, our total revenues were CNY 626 million, increasing 23.8% quarter-over-quarter and 125% year-over-year. Specifically, retail sales revenues were CNY 348.4 million, increasing 9.1% quarter-over-quarter and 279% year-over-year. The retail revenue growth was mainly driven by the 30% quarter-over-quarter sales volume growth. At the same time, we have been optimizing our inventory structure to better meet mainstream demand of mid-range priced cars as we are targeting broader middle-class customers. The average selling price of retail cars dropped to CNY 145,000 in Q1 from CNY 180,000 in the prior quarter.
The ASP will further decrease to CNY 118 thousand in the next quarter and remain relatively stable in the future. Although the decreasing ASP partially offset the increase in revenue growth from retail sales volume, an optimized inventory structure with more widely accepted price range will lay a healthier foundation for our long-term sales growth.
本季度的毛利水平为1.1%，较上一季度的0.2%开始回升。刚才我们提到公司库存结构调整的方向是增加主流中等价格车辆的比例，所以我们通过调整销售价格来加速高价车的销售周转，并对部分待售车辆进行了减持。如果排除库存调整的影响，本季度的毛利水平约在4%左右。我们预计在未来的几个季度，库存结构会按照计划的节奏逐渐调至到合理水平，毛利率也将在未来几个季度持续改善。
Gross margin was 1.1% for the three months ended June 30, 2022, compared with 0.2% in the last quarter. As I just mentioned, we have been shifting towards mainstream mid-range priced vehicles, so we accelerated the sales of the higher priced vehicles through price adjustments. This led to some write-off of unsold inventories to improve turnover. These actions led to a currently low gross margin. If we excluded the impact of inventory adjustment, our gross margin would be at the 4% level. While the industry structure becomes more and more reasonable as planned, we expect our gross margin to improve quarter-over-quarter this year towards a normal gross margin level. We continued our stringent expense management and the total operating expenses were relatively stable compared with the prior quarter.
Although our retail sales volume continued to grow, we reduced the overall customer acquisition costs, thanks to our cost-effective marketing channels and strategies. The non-GAAP adjusted loss from continuing operation this quarter was RMB 84.9 million, an improvement of RMB 11 million compared to the prior quarter. As our business continues to grow and our inventory adjustment is finalizing, we expect to see further improvements in the remainder of the fiscal year. The detailed financial statements were published in our earnings release online, so I will not repeat the numbers here. I do want to emphasize one thing as usual. At the end of the first quarter, fiscal year 2023, similar to the past quarters, there was a fair value impact related to our financing transaction.
The share price was $0.42 per ADS on June 30th, 2022, and on March 31st, 2022, the share price was $1.02 per ADS. This resulted in a non-cash gain of RMB 252 million from fair value change of the warrant liability and for our contract assets on our balance sheet. I would like to emphasize again that this fair value impact was a non-cash gain and not a result of our operations. We are proactively optimizing the balance sheet. In the end of August, the company issued ordinary shares to ClearVue at a price of $1.03 per ADS, in exchange for fully releasing the company's obligations under the convertible note with an aggregate principal amount of $12.6 million.
Today, NIO Capital has made further payments based on a payment schedule as part of its total $100 million investment to support our Xi'an IRC expansion and Hefei Super IRC construction. About next quarter's forecast. In addition to revenue guidance, we have added guidance on transaction volumes and average selling prices to give you a better picture of our business progress. For the three months ending September 30, 2022, the company expects its retail transaction volume to be around 3,000 units, representing an increase of 25% quarter-over-quarter and an increase of 192% year-over-year. The average selling price for retail cars is expected to be around RMB 118,000.
The company also expects its wholesale transaction volume to be around 2,800 units, with ASP expected to be around CNY 82,000. The company estimates that its total revenues, including retail vehicle sales revenue, wholesale vehicle sales revenue, and value-added services revenue to be in the range of CNY 590 -CNY 610 million. This concludes our prepared remarks. Operator, we're now ready to take the questions.
Thank you. If you wish to ask a question, please press star then one on your telephone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. When asking a question, please state your questions in Chinese first, then repeat them in English, for the convenience of everyone on the call. At this time, we'll pause momentarily to assemble our roster. Our first question comes from Ying. From Ying, please go ahead.
Okay. I will repeat the question in English again. We noticed that you're expanding your outlook disclosure. Your retail transactions are expected to grow, but wholesale transactions are expected to decline. How should we expect the two business to perform going forward? DK, please go ahead.
Okay.
Retail sales will be the most important indicators of our performance. To provide more clarity on our business growth trends and operating results, we have expanded our guidance to include our expectations of transaction volumes and average selling prices in addition to revenue outlook starting this quarter. We expect retail sales to maintain its growth momentum in the fiscal year of 2023. As more consumers recognize our products and services, our retail sales will continue to grow. Additionally, as we expand our inventory size and enhance our vehicle acquisition and inspection and reconditioning capabilities, we will have more retail standard vehicles, which will also contribute to the growth of our retail sales. Wholesale business is an effective supplement to our retail sales. As our retail sales force become more potent, we will retail more vehicle and naturally decrease the percentage of wholesale business.
In the long term, we expect 75% of our total sales to come from retail, and the remaining 25% will come from wholesale. That's my answer to the question. Thank you.
The next question comes from Tom Kerr from Zacks Investment Research. Please go ahead.
Hello. My question is about vehicle acquisition. Do direct purchases from consumers still represent about 1/3 of vehicle acquisitions? And is that share growing? And then just generally, how should we think about car sourcing costs, you know, given the series of favorable policies that's been implemented?
Hello, Tom. This is DK.
嗯，这个季度我们向消费者直接采购占总采购量已经接近40%，我们预计还会进一步的提高。目前向消费者收车主要是从两个IRC所在地，西安和合肥及其周边城市，就是我们向消费者收车的主要来源。但是随着我们库存规模的不断扩大，特别是县间取消后，优质的车源的全国流通更加便利，我们也会增加向异地消费者的采购比例。
Our direct purchases from consumers accounted for nearly 40% of our total acquisitions this quarter, and we expect this percentage to increase further. Currently, we collect cars from consumers, mainly from the two IRC locations in Xi'an City and Hefei City, as well as their surrounding cities. These are our primary sources of direct purchases from consumers. However, as we expand our inventory size, we will also increase the percentage of vehicle we purchase from consumers in other locations, especially after the removal of cross-regional transfers, which facilitates the national circulation of high quality cars.
我们的汽车采购成本主要是收车. 对，我们的汽车采购成本呢，主要是收车价以及相应的一些过户、物流等交易成本。长期来看，我们的采购成本是会下降的。那么特别是这个国内的这个县间取消后，丰富了车源的选择，优信可以依据市场数据，掌握全国不同区域的车均价格差异来补充货源。收车价格所创造的利润呢，会进一步的提高，那当然对应于收车价格会有下降的空间。
In terms of our vehicle acquisition costs, they mainly consist of the vehicle purchasing price and the related transaction costs, such as title transfers and delivery logistics. In the long term, we will continue to reduce our acquisition costs. After restrictions are lifted, we can access a broader selection of vehicle sources. We can effectively fill our inventory by analyzing the market data of vehicle pricing in different regions. This will enable us to further reduce our vehicle acquisition costs.
关于过户成本，就是新政实施以后，备案转移登记等新规，给像优信这样一直规范经营的企业带来很多便利。此外，由于电子档和临时牌照的执行，以及我们之后可以向消费者直接开具发票，那每一台车辆的交易成本会下降几十美金。
The implementation of the new policies, such as regulations on the title transfer re-registration, will benefit online companies like us. In addition, with the implementation of electronic filing, temporary license plates, and new tax treatments, we can reduce our transaction costs per vehicle by thousands of dollars.
那么最后一块，最后一点是优信在国内最早开展全国购业务，建立了业内最先进的这个物流规划体系，并表示动态的这个优化，所以我们的物流成本一直在行业内是较低的。那未来伴随着采购量的增大，那么会显现一些规模效应，我们的物流成本也会继续下降。
We were the first in the industry to start selling used cars nationwide. We have also established an industry's most advanced delivery routing system with dynamic optimization. We have kept our logistics costs relatively low in the industry. With the increase in volume and improving economics of scale, our logistics costs will also continue to decrease.
好，以上是我这个问题的回答。谢谢。
That's my answer to your question. Thank you.
I have one more quick question. Yes, on these favorable policies, do they all start October 1, or have some already been implemented that you're seeing?
今年这一系列优惠政策的出台，加速了中国二手车市场的发展。现在这些政策有什么更新吗？
今年连续多个重磅的行业文件啊，基本上体现了政府对二手车行业发展的一个宗旨，那就是鼓励有品牌的经销行为。那作为二手车行业的主流的交易模式，因此呢，国家限制了以个人为身份一年内交易二手车总量，要求但凡是经销模式都可以直接完成交易，同时给予了二手车商品属性。
In 2022 to today, we saw a number of high-profile industry policies. These policies signify the government's commitment to developing the used car industry by solidifying well-branded dealerships as the mainstream transaction model in the market. Consequently, the same regulators limited the total number of used cars an individual is able to trade every year, whereas dealerships are now able to complete vehicle transfers directly. These measures have effectively instituted used cars as commercial products.
从国家大的这个政策方针上来讲，要盘活二手车行业，那还是需要更多的能够对顾客提供有品质商品、有保障服务能力的经销群体，作为行业的生力军，才能够真真正正赢得消费者对二手车的这个产品的喜爱。这个国家政策引导的方向，其实和优信业务模式的特点，以及我们对行业的认知是高度融合的。我们希望能够在这样一个二手车行业几十年重大变革的机遇里面，充分地借助好这样的优势，得到一个良好的发展。
In fact, from the state regulated perspective, we still need more companies that can provide high quality vehicles and reliable services as the driving force to revitalize the used car industry and win customers love for used cars as a product. The direction of this new national policy is highly consistent with our perception of the market and the characteristics of our business. The used car industry is currently experiencing its most crucial changes in decades, and we hope to take full advantage of such tailwinds to fuel our growth.
从市场反应的角度来看，今年上半年受疫情影响。
戴总。
Sorry, yeah.
戴总。
Did you finish?
Yeah, Tom, just emphasize about any updates since October 1st.
All right, okay.
Can you share?
Yeah。
Yeah。
Yeah。 嗯 。
麻烦您多分享一些十月一号以后新政以来的一些政策和变化以及影响，谢谢。
The next question comes from.
Okay, the next question.
Yep. Next question comes from Fei Dai from TF Securities. Please go ahead.
公司管理层好。我有两个问题。首先我想了解一下公司目前的融资到账情况，资金使用状况如何，以及未来的资金使用计划如何？Repeat my question in English. I've got two questions. The first one is how is the company's current financing situation? How are the funds being used? What's the company plan to do with these funds in the future? Thank you.
大家好，我是John。公司之前披露的未来资本新追加的亿美元投资款已经按照协议开始支付，融资到账执行也在有序地进行。那这融资款呢，我们主要计划用于增加我们的库存规模，提升全流程整备翻新的能力，同时支持我们西安IRC的扩容和在建的合肥超级工厂的建设引进。
NIO Capital has made payments based on further agreed upon payment schedule as part of its total $100 million strategic investment. The payment is proceeding in an orderly manner. We will utilize the funds mainly to expand our inventory size, enhance our reconditioning process, and support the expansion of the Xi'an IRC and the development of the superstore that's currently under construction.
这是对你的问题的一个回答。
That's the question.
Okay. Please go ahead.
Yeah. Sorry, please go ahead.
好。OK，好，然后第二个问题是，我想了解一下目前公司C端客户的成交场景和流程是怎样的，线上APP成交和线下IRC成交的占比是怎么样的？ Repeat my question in English. Till now, what is the transaction scenario and the process of the company's consumers? What is the proportion of online and offline transaction? Thank you.
那个交易场景的构成是这样，现在25%的顾客完全是在线上完成购买的，然后75%的顾客呢，会到现场来看车和提车。
Currently 25% of our transactions are generated purely from online. For the remaining 75% customers will prefer to visit our stores in person and see the vehicles offline before purchasing a car.
那么这个区别的背后原因，其实所有的顾客呢，他们在购买前都会首先在线浏览车辆。那么区别于是距离合肥IRC或西安IRC较近的顾客，在线浏览之后，他们还是更愿意到现场去看一下实车，然后自提。那距两个IRC比较远距离的顾客呢，就在线下单，然后直接在线购买，我们送货上门。以上是我对这个问题的回答。
However, all the customers generally look at the vehicles first. The difference is whether they are located close to our IRCs or not. For customers near our stores, they are more willing to visit us, offline after checking out the vehicles online. During the visit, they can understand the real conditions of the vehicles before picking them up on site. For customers who located further away from our IRCs, they will order and purchase online.
谢谢管理层。
Thank you for your question.
Thank you. We have reached the end of the question answer session. I'd like to hand the call back to Joyce Tang for any closing remarks.
Thank you everyone for joining our call today. We look forward to see you next time. Bye bye.
The conference is now concluded. Thanks.
OK, bye bye.
Thank you. The conference is now concluded. You may now disconnect.