TuanChe Limited (NASDAQ:TC) Q2 2020 Earnings Conference Call - Final Transcript

Sep 18, 2020 • 08:00 am ET

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TuanChe Limited (NASDAQ:TC) Q2 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you. We'll now begin the question-and-answer session. [Operator Instructions] The first question today comes from Jack Vander Aarde of Maxim Group. Please go ahead.

Analyst
Jack Vander Aarde

Hi, good morning guys. Thanks for taking my questions as well. So I guess I'll just start with the China auto environment as a whole. If you could just kind of summarize what you're seeing in terms of new vehicle sales and the opportunities. Or if basically the market is getting more healthy and steady and consistent, if there's any green sky or blue skies ahead? Or do you expect it to remain choppy relative to where you were a few months ago when we last spoke?

Executive
Cynthia Tan

Okay. Great. Nice to talk to you again, Jack, and let me translate the first question. [Foreign Speech]

Executive
Wei Wen

[Foreign Speech]

Executive
Cynthia Tan

In the second quarter, the new car sales in China started to rebound. It increased by 1.8% and 2.9% year-over-year, respectively, in May and June. And in July, the auto retail sales increased by 7.7% year-over-year. This is the highest level we've seen since May 2018. And this is also helped by the government's measure to contain COVID-19 pandemic domestically as well as different local governments have taken policies to promote auto sales and domestic consumptions. So the market environment is much -- have been much improved since second quarter, and we are having quite optimistic forecast for now on the market side.

Executive
Wei Wen

[Foreign Speech]

Executive
Cynthia Tan

Does that answer your question, Jack?

Analyst
Jack Vander Aarde

Yeah. Yeah, that was fantastic. And then another question I have is as it relates to the second quarter and your results. Gross margin -- while revenue continues to be pressured, and obviously so, gross margin was pretty significantly high. It was in the high 70s, which was a pretty exceptional performance for gross margin. And you guys mentioned in the prepared remarks that this is due to mix primarily. But is there anything else that was helping the gross margin profile this quarter besides just mix?

Executive
Cynthia Tan

Do you need my translation? Let me take your question.

Executive
Chenxi Yu

Hello, Jack. So yes, the gross margin for our company has improved significantly from -- well, at higher 70s. This is mainly due to the change in the revenue mix because in the second quarter, our online marketing services has grown strongly. So -- and the gross profit for that revenue side has been over 80%. So that's the main reason our gross margin has improved. Does that answer your question?

Analyst
Jack Vander Aarde

Okay. Understood. That's helpful. Yes. Yes, it does. And then I guess, just in terms of how about automobile transaction sales? Are you guys noticing any -- of the automobiles you did facilitate to sell during the quarter, are there any noticeable trends or, I don't know, I guess, in terms of the markets you serve within China, did you see a noticeable trend shift in how many vehicles you're able to sell through the virtual dealer platform or at least how you're enticing maybe new leads?

Is that driving