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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Presentation
Executive
Chenxi Yu

-- the Company continued to hold fewer auto shows and special promotion events during the second quarter of 2020 than usual, in accordance with government guidelines and for the best interest of public health. This has resulted in a 73.1% year-over-year decline in net revenues to RMB54.7 million in the second quarter.

Nevertheless, as our offline events gradually resumed operations since late May and our virtual dealership and online marketing services registered strong growth, our net revenues and gross profit both rebounded strongly from first quarter, achieving 464.9% and 658.3% quarter-over-quarter growth, respectively.

Amidst the COVID-19 and macroeconomic challenges, we remained focused on optimizing our cost structure, which resulted in a 66.8% year-over-year reduction in operating expenses and significantly reduced our net losses, both year-over-year and sequentially. We are closely monitoring the circumstances and will adjust our operation strategy accordingly, while keeping a disciplined cost structure in order to deliver positive returns for our shareholders in the long run.

Now I would like to walk through our second quarter 2020 financial results. Before I start, please note that all numbers stated in my following remarks are in RMB terms, unless otherwise noted.

Our total revenues in the second quarter were RMB54.7 million, decreasing 73.1% from RMB 203.5 million in the same period last year. This was a result of the adverse impact of the COVID-19 pandemic and the sluggish Chinese economy. The decrease was partially offset by the steady growth of virtual dealerships and online marketing services and others. Compared with the first quarter this year, total revenues increased by 464.9%, as our offline services recovered and our online services made strong progress.

Due to the continued adverse impact of the COVID-19 pandemic, our offline marketing services revenues generated from auto shows decreased by 82.5% to RMB33.4 million from RMB190.6 million in the second quarter of 2019. The offline marketing services revenue generated from auto shows increased 486.5% over the first quarter of 2020 of RMB5.7 million.

Revenues generated from special promotion events in the second quarter of 2020 were RMB1.5 million compared with RMB5.8 million in the second quarter of 2019 and RMB0.3 million in the first quarter of 2020. Revenues from our virtual dealership, online marketing services and others increased by 180% to RMB19.9 million during the quarter compared with RMB7.1 million in the second quarter of 2019 and achieved a quarter-over-quarter growth of 438.3%, primarily due to our continuous expansion of online marketing services, including commencements of live streaming promotion events.

The year-over-year growth was also helped by revenues generated from our completed acquisition of Longye International Limited in January 2020. Our gross profit in the second quarter decreased by 70.1% to RMB43 million from RMB144 million in the second quarter of 2019, but increased by 658.3% quarter-over-quarter. Our gross margin increased to 78.6% from 70.8% in the same period last year, primarily due to the change in the revenue mix.

In the second quarter, selling and marketing expenses decreased by 77.7% to RMB48.6 million from RMB217.5