Quhuo (ticker not provided), a diversified service provider, reported a mixed financial performance for the first half 2024. Despite a challenging start, the company's Mobility Services segment showed significant growth, with revenue surging by 71.7% year-over-year (YoY).
This was bolstered by a 389% increase in revenue from international vehicle export solutions, with 815 new energy vehicles exported overseas. However, the company's overall revenue declined by 6.7% YoY to RMB 1.62 billion.
Quhuo also reported a net loss of RMB 46.5 million during the same period. In the latter half of the year, the company plans to redefine and innovate its overseas business model to foster faster growth and solidify its international market position.
Key Takeaways
- Quhuo's total revenue for the first half of 2024 reached RMB 1.62 billion.
- Mobility Services segment revenue grew by 71.7% YoY, with significant gains in vehicle export solutions.
- The company experienced a net loss of RMB 46.5 million.
- Lower labor costs and service fees contributed to a decrease in cost of revenue.
- Quhuo plans to focus on international expansion and innovation in its business model.
Company Outlook
- Quhuo aims to expand market share and business coverage in the second half of 2024.
- The company plans to leverage its experience in vehicle exports and ride-hailing solutions to grow Quhuo International.
- Future strategies include defining and innovating the overseas business model for faster revenue and profit growth.
Bearish Highlights
- Overall revenue decreased by 6.7% YoY due to business optimization and transaction model changes in some segments.
- The company recorded a net loss of RMB 46.5 million in the first half of 2024.
Bullish Highlights
- Revenue from shared-bike maintenance service increased by 6.2% YoY.
- Ride-hailing service revenue grew by 47.5% YoY.
- The housekeeping service segment saw a 28.5% increase in gross profit YoY.
Misses
- Revenue from housekeeping and accommodation solutions and other services decreased.
- Technological optimization reduced The company's revenue from RMB 17.3 million to RMB 12.4 million.
Q&A highlights
- Quhuo discussed plans to innovate their overseas business model in the second half of 2024.
- The company is developing systems to optimize new business processes with partners.
- There is a focus on achieving scale growth and expansion in the international market.
Quhuo is navigating a period of transition with an eye towards international expansion and business model innovation. Despite the current financial losses, the company's strategic adjustments and growth in key segments suggest a commitment to long-term growth and market adaptation.
InvestingPro Insights
Quhuo, in its quest to solidify its presence in the international market, appears to be facing a complex financial landscape. According to real-time data from InvestingPro, Quhuo's market capitalization stands at a modest 29.42 million USD, reflecting the scale of the company in comparison to its peers. Despite the recent financial challenges outlined in the article, Quhuo's Price to Earnings (P/E) ratio is currently at a low of 3.9, which could suggest that the stock is undervalued relative to its earnings. This is further supported by a Price/Book ratio of 0.42 for the last twelve months as of Q4 2023, indicating that the stock might be trading below its net asset value.
InvestingPro Tips highlight that Quhuo is trading at a low revenue valuation multiple, which aligns with the company's reported revenue decline. Additionally, the company's stock has taken a significant hit over the last week, month, and three months, with price total returns plummeting by 10.38%, 28.05%, and 38.57% respectively. This volatility is critical for investors to consider, especially those looking for stability in their investments.
For readers interested in a deeper dive into Quhuo's financial health and stock performance, InvestingPro offers additional tips which could provide valuable context and foresight. As of now, there are 19 more InvestingPro Tips available that could help investors make more informed decisions regarding Quhuo's stock.
InvestingPro's fair value estimate for Quhuo is currently at 0.52 USD, which might indicate potential upside from its previous close price of 0.36 USD. This information could be particularly relevant for investors considering entry points into the stock or assessing its future trajectory in light of the company's strategic plans for international expansion and business model innovation.
Full transcript - Quhuo Ltd (QH) Q2 2024:
Qishu Wang - Associate Manager of IR:
Leslie Yu - Chairman and CEO:
Barry Ba - CFO:
Operator: Good day, and welcome to the Quhuo's '24 H1 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Qishu Wang, Investor Relations. Please go ahead.
Qishu Wang: Thank you, operator. Hello, everyone. Welcome to Quhuo's first half of 2024 earnings conference call. The company's results were released earlier today and are available on our IR website. On this call today are Leslie Yu, Chairman and CEO; and CFO, Barry Ba. Leslie will review business operations and company highlights followed by Barry, who will discuss financials and guidance. They will be available to answer your questions in the Q&A session that follows. Before we begin, I would like to remind you that this call may contain forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and current market and operating conditions and relate to the events that involve known or unknown risks, uncertainties and other factors. All of them are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties and factors is included in the company's filings with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as required under the law. With that, I will now turn the call over to our Chairman and CEO, Mr. Leslie Yu. Please go ahead.
Leslie Yu: Thank you, Qishu, and thank you all for joining our 2024 first half earnings conference call. In the first half of 2024, the global economy environment remains complex and volatile, particularly in the context of uncertainty in both domestic and international market, which caused numerous challenges for our industry. However, Quhuo maintained stable business growth and these fluctuations through strategic foresight and lean operational business. In the first half of 2024, Quhuo achieved a total revenue of RMB 1.62 billion. In terms of profitability, although we experienced a short-term loss in the first quarter due to market and seasonal factors during the Chinese New Year. We successfully rebounded in the second quarter. Our gross margin not only returned to normal levels but also surpassed the last year's performance, reaching 5.6%, demonstrating our enhanced resilience and profitability are made much wanted. On the cost control front, thanks to our continuous lean management, general and administrative expense decreased by 13.2% year-on-year in the first half of 2024, which reflects our ongoing efforts to improve operational efficiency. Looking at the business segments, despite the fluctuation in the overall market environment, our Mobility Services segment performed very well, with total revenue increasing by 71.7% year-on-year. Our revenue from shared-bike maintenance service grew by 6.2% year-on-year, while ride-hailing service revenue increased by 47.5% year-on-year. Particularly on Quhuo's International vehicle export solutions, the revenue increased by 389% year-on-year, successfully exporting 815 new energy vehicles overseas in the first half, making a new growth driver for us with just one year and further expanding our business coverage in international markets, showcasing our international competitiveness. The housekeeping service segment also performed very well, with gross profit increasing by 28.5% year-on-year and the gross margin rising from 13.8% in the same period last year to 24.6%, reflecting our success in optimizing operational efficiency and enhancing service quality. Additionally, with the rapid expansion of our housekeeping business, our overall service coverage has significantly expanded now covering 132 cities, a 21.4% increase year-on-year. This growth not only indicates strong market demand for our housekeeping services, but also further solidifies our leadership in this field. In 2024, against the backdrop of changing international dynamics and the restructuring of the domestic market, companies must focus on long-term trends, seizing enduring market demand to provide a sustained and stable value. In this context, Quhuo focuses on addressing three key issues to deliver continuous commercial and social value to the market. First, values in the employment, China's new employment forms has led developed on driving forces of the digital and ensuring economies with increasing attention and support from policymakers, particularly in enhancing the protection of workers employed in new forms. For over a decade, Quhuo's platform employment platform has consistently provided valuable job opportunities for a large number of workers. As of June 30, 2024, the platform has accumulated over 770,000 registered workers. Whether in on-demand delivery, mobility services, housekeeping services, or other large services, Quhuo's platform has created a stable and flexible jobs for workers, providing a source of income in a complex market environment and providing comprehensive support including essential leaving guarantees and commercial insurance, ensuring their security. This is not only creates value for society, but also further strengthens our position as industry leader. Second, as the consumption and tourism environment gradually recover, Homestay as a new business format of tourism has received a significant promotion at the national level. In July 2023, the National Development and Reform Commission proposed to calculate and publish a bench of related tourism oriented homestays and build a number of high-quality homestays. In response to this trend, Quhuo's Homestay segment Chengtu is actively advancing the development of homestay operations in China. We are committed to fully developing the self-operated model, providing high-quality services, building a strong brand image and expanding our business scale. Additionally, we are exploring a more comprehensive homestay services Chengtu model, covering the entire process from booking to aftersales services while expanding our booking mini program and multi-platform sales channels to further enhance customers' experience and market coverage, providing sustainable growth momentum for the company. Following the government's proposal in the first half of the year to consumer existing housing inventory in response to the new change in the supply-demand relationship with the real estate market and society's expectations for high-quality housing, Quhuo is currently collaborating with a leading long-term rental platform in China to explore a combined short-term and long-term rental model for idle properties. Actively revitalizing existing housing inventory to generate income for property owners and provide more consumers with quality housing services. This initiative not only improves the operational efficiency of this asset but also creates considerable commercial value for the company. As policies becoming more clear, we believe this business will bring significant growth plans to the company. Finally, in light with the current challenges in domestic automotive overcapacity and the revenue value disposal of the second-hand vehicles, Quhuo has successfully opened a new international market through our vehicle export and the ride-hailing solutions abroad. In recent years, the development of new energy vehicle industry has crucial introducing trafficking related emission providing high-quality carbon peak shipment reducing dependency on oil exports and supporting the consumption of our global automotive powerhouse. In 2023, China exported 1.2 million new energy vehicles, 77.6% year-on-year increase, accounting for over 60% of the global production and sales. According to forecast, this figure is expected to grow steadily in 2024. This growth changes not only highlights Chinese leadership in the global new energy vehicle market, but also provides vast opportunities for Quhuo's international market expansion. Quhuo has a unique competitive advantage in the field of on energy vehicle exports. With over five years of experience in life-saving operations and more than two decades of experience in vehicle exports, accumulating deep market understanding and professional capabilities. Through partnership with multi automated brands, the construction of a national-wide vehicle sourcing network and a strong vehicle refurbishment resources, along with close cooperation with 58 overseas distributors globally. Quhuo has successfully leveraged stable sales channels and broad market expansion opportunities, demonstrating tremendous growth potential. With the continuous rise in global demand for new energy vehicles, Quhuo will further expand our market share and business coverage in the second half of the year, creating new growth opportunities for the company and our global partners. Additionally, our technology empowerment projects in overseas markets are also making positive progress. Leveraging our accumulated operational and technical capabilities in on-demand delivery and ride-hailing, Quhuo is forming strong mutually beneficiary partnership with overseas partners through technology and management empowerment. The on-demand delivery and the rising system development of overseas markets are currently being piloted in selected cities across. By integrating the export supply chain of new energy vehicles, we are gradually building Quhuo International overseas business ecosystem. Maintaining the continuous expansion of our overseas business, while consolidating our competitive advantage. Overall, despite the challenges faced in the first half of 2024, Quhuo has maintained steady business growth and continuous innovation. This success is due to our forward-looking strategic planning and a keen grasp of market change in complex global environment, supported by redefined management practices. Looking forward, Quhuo will continue to lead the company's development with a long-term strategic vision, optimizing our operational model and the resource allocation, seizing new key market opportunities. This concludes my remarks, and I will turn the call to our Chief Financial Officer. Barry will provide a detailed review of our financial performance.
Barry Ba: Thank you, Leslie. Hello, everyone. Welcome to Quhuo's first half of 2024 conference call. Please be reminded that all amounts quoted here will be RMB unless stated otherwise. Total revenue decreased by 6.7% from RMB 1,736.3 million in the six months ended June 30, 2023 to RMB 1,619.9 million in the six months ended June 30, 2024 due to the following reasons. Revenue from on-demand delivery solutions for RMB 1,499.1 million, representing a slight decrease of 9.1% from RMB 1,649.6 million in the six months ended June 30, 2024 -- 2023, primarily because we optimized our business by disposing several inferior business districts, which leads to a decrease in the revenue scale. Revenues from Mobility Service Solutions consisting of share-backed maintenance, ride-hailing and vehicle export business solutions for RMB 100.5 million, representing a remarkable increase of 71.7% from RMB 58.5 million in the six months ended June 30, 2023, primarily due to the growth of our vehicle export solutions which generated revenue of RMB 58.6 million. Revenue from housekeeping and accommodation solutions and other services are RMB 20.4 million, representing a decrease of 27.8% from RMB 28.2 million in the six months ended June 30, 2023, primarily due to the transaction of business model in our hotel services. Cost of revenue of RMB 1,595.2 million, representing a decrease of 4.5% year-over-year, primarily attributed to the decrease in our labor cost and the service fee paid to team leaders in line with the decrease of revenue from on-demand delivery solutions. Speaking of expense, general and administrative expense were RMB 7.9 million, representing a decrease of 13.2% from RMB 81.6 million in the six months ended June 30, 2023, primarily due to the decrease in first professional service fee from RMB 22.2 million in the first half of 2023 to RMB 14.5 million in the first half of 2024. And the second reason is that welfare and business development expense and office expense from RMB 17.3 million in the first half of 2023 to RMB 14.2 -- sorry, RMB 12.4 million in the first half of 2024. And the third reason, shared-based compensation expense from RMB 3.5 million in the first half of 2023 to nil in the first half of 2024. All above are owing to our experience control through technological optimization. R&D expense were RMB 4.9 million, representing a decrease of 25.7% from RMB 6.6 million in the six months ended June 30, 2023, primarily due to the decrease in average compensation level for our research and development personnel as we restructured our R&D team. We record other loss net of RMB 3.1 million in the six months ended June 30, 2024 compared to other income net of RMB 9 million in the six months ended June 30, 2023, primarily due to a decrease in fair value change of investment in the mutual fund. We recorded income tax benefit of RMB 2.6 million in the six months ended June 30, 2024, as compared to income tax benefit of RMB 2.4 million in the six months ended June 30, 2023, primarily due to the increase in deferred tax asset benefits. As a result of foregoing, we have a net loss of RMB 5.7 million or RMB 46.5 million in the six months ended June 30, 2023 and 2024, respectively. Adjusted net loss was RMB 46.5 million as compared to adjusted net loss of RMB 1.8 million in the first half of 2023. Adjusted EBITDA loss was RMB 34.8 million as compared to adjusted EBITDA of RMB 11.1 million in the first half of 2023. In terms of the balance sheet as a result of June 30, 2024, company has cash short-term investments and restricted cash of RMB 104.9 million and the short-term debt of RMB 104.2 million. This concludes my prepared remarks. Thanks for your attention. We are now pleased to take your questions. Operator, please go ahead.
Operator: [Operator Instructions] And the first question comes from [indiscernible] Limited.
Unidentified Analyst: My question is, what are the company's plans for Quhuo International in the second half of 2024? And how do you see its growth prospects? Thank you.
Leslie Yu: Okay. This is Leslie. On Quhuo International serves as the platform for Quhuo's global expansion. We have entered the international markets through the trade-off new energy used vehicles, which help us to connect outstanding partners' resources with domestic production capacity. And we have started building brand recognition in overseas market. I think that we have successfully achieved our first stage growth with the business now in face of continuous revenue generation and sales sustained profitability. Talking about the second half of 2024, we will be moving into the next stage of development. Based on the first stage, we will focus on defining and innovating our overseas business model. By redefining our partner roles and unifying long-term profit sharing mechanism to drive faster growth in both revenue and profit. Additionally, we will be developing systems to optimize new business processes with our partners to ensure a successful establishment of new business ecosystem. So we expect this phase not only to bring scale growth for Quhuo International, but also to achieve a significant qualitatively further solidifying and expanding our position in the international market. So for the second half of 2024, we are looking forward to step into the Phase 2 of our international business. Yes. Thank you.
Operator: And this does conclude the question session as well as the event. Thank you so much for attending today's presentation. You may now disconnect your lines.
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