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
Analyst
Jack Vander Aarde

the virtual platform? I'm just wondering if there's anything longer term or midterm in the strategy for the offline business that you have. And then how that relates to the online business you have? How is the omnichannel strategy working as a whole basically?

Executive
Cynthia Tan

Yes. Sure, Jack. Let me translate your question, and maybe we'll take -- answer that on another respect. Okay. [Foreign Speech]

Executive
Wei Wen

[Foreign Speech]

Executive
Cynthia Tan

We are still seeing an upside trend on the China new -- China auto market new car sales in August. And we are expecting the traditional high consumption season in the fourth quarter, starting from September. And so if there is no another hit from the COVID-19 pandemic, we are seeing very positive market sales trends in the overall market.

Executive
Wei Wen

[Foreign Speech]

Executive
Cynthia Tan

But as we mentioned in our prepared remarks, the user behavior is shifting online now. So this year, we have made significant progress in our online auto shows and online special promotion events. Although we have been cooperating with Alibaba since -- for several years by now, the depth of the cooperation has improved significantly since the end of last year. We have launched a lot -- a number of online live streaming, special promotion events on Tmall Live, and our online program provides a solution that is win-win for both OEMs, dealers and consumers.

Executive
Wei Wen

[Foreign Speech]

Executive
Cynthia Tan

And from our perspective, the online business has generated higher gross margins. As Chenxi just mentioned, it should be around 80% or even higher. And on the other side, besides Tmall Auto, we have been also cooperating with Baidu Youjia, and that is the auto segment of the Baidu portal, which is the largest search engine in China. So we have been their sales representatives in all of China and generated a related data product. So this also contribute to our online marketing revenues since first quarter of this year, and will continue to be a bigger part of our online marketing revenue throughout the year. Does that answer your question, Jack?

Analyst
Jack Vander Aarde

Yes. Absolutely. That more than answers my question. I appreciate the added color. The last thing is just as you look -- a forward-looking question again. You guys have done a nice job, especially with Q2 again, of controlling your operating expenses during this climate that we're in today. Just in terms of the directional pattern for the rest of the year, how would you expect the operating expenses to trend as you look forward? Or -- and how much of it is kind of variable and it just depends as we go along here? Or is there anything concrete you can say about operating expenses and the trend?

Executive
Cynthia Tan

Okay. Ronnie will take your question.

Executive
Chenxi Yu

Well, in terms of operating expenses, we will expect that the operating expenses will grow because some of it are related to our operations, to our offline and online services. So as our revenues recover, the expenses will grow. But in terms of the overhead side of