BEIJING, Aug. 8, 2018 /PRNewswire/ -- Autohome Inc. (NYSE: ATHM) ("Autohome" or the "Company"), the leading online destination for automobile consumers in China, today announced its unaudited financial results for the second quarter ended June 30, 2018.
Second Quarter 2018 Financial Highlights
- Net Revenues in the second quarter of 2018 were RMB1,868.9 million ($282.4 million), exceeding the high end of the Company's original guidance of RMB1,800.0 million ($272.0 million).
- Net Income attributable to Autohome Inc. in the second quarter of 2018 was RMB691.6 million ($104.5 million), compared to RMB517.7 million in the corresponding period of 2017.
- Adjusted net income attributable to Autohome Inc. in the second quarter of 2018 was RMB744.3 million ($112.5 million), compared to RMB565.2 million in the corresponding period of 2017.
Adoption of ASC 606, Revenue from Contracts with Customers
In May 2014, the FASB issued a new standard related to revenue recognition and further issued several amendments and updates to the new revenue guidance. The Company has finalized its analysis and the most significant impact is the change of the presentation of value-added tax from gross basis to net basis. The Company adopted this guidance effective January 1, 2018 using the modified retrospective method. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.
To provide investors with meaningful year-over-year comparison, the Company has provided a reconciliation table for the impact of adopting this new revenue guidance for the second quarter of 2018 and corresponding period in 2017, as adjusted, which was related to the change in presentation of value-added tax from gross basis to net basis.
For the ease of readers, the operational results are discussed and analyzed under the new revenue guidance, including those for the comparative period in 2017.
Second Quarter 2018 Operational Highlights
- Mobile Traffic Leadership Continues: According to Quest Mobile, during the second quarter of 2018, the number of average daily unique visitors who accessed the Company's primary "Autohome" application reached 10.3 million, representing an increase of 54% compared to the second quarter of 2017, further solidifying the Company's dominant position among auto vertical applications in China.
- Expanding Platform with Data-driven Professional Generated Content (PGC): The Company's automobile content platform continued to be the best-in-class with the number of professional content contributors increasing 25% sequentially, and the amount of content posted, including articles and videos, increasing 150% sequentially. Autohome is expanding collaboration with automakers, key opinion leaders (KOLs), professional experts, social media, etc. In addition, Autohome has further diversified its content production by launching nine columns, including celebrity talk show, gourmet on the road, animated car showcase, comedian car review, cars for HER, cars and culture, road music, industry opinion interview, and test drive.
- Optimizing Used Car Transaction under C2B2C Model: The Company's recent US$100 million investment in TTP Car Inc. ("TTP") is aimed at accelerating the online transaction for used cars. The strategic investment in TTP will significantly drive the overall traffic, C2B automobile sourcing, dealer participation, and financing options for TTP. In addition, the Company has launched "Autohome Trusted Alliances" with qualified used car dealers to facilitate more precise matching and transactions for B2C business. The Company's respective strategic partnerships with TTP and the carefully selected high-quality offline dealers are a major milestone for the Company's C2B2C model execution in extending audience reach for better targeting, improving used cars sourcing and transparency, increasing sales leads generation and transaction services, as well as broadening the necessary financing support.
Mr. Min Lu, Chairman of the Board and Chief Executive Officer of Autohome, stated, "We are pleased to report solid second quarter results with continued revenue growth, which again exceeded our guidance. Our core media and leads generation businesses remain strong across all key metrics, including user numbers, brand recognition, user engagement, and automaker/dealer partnerships. In addition, our new businesses of auto financing and data products continued to demonstrate significant growth momentum in the first half of 2018. The differentiated value propositions of our core and new service offerings are key to attracting and engaging a large user base and providing automakers and dealers with innovative and cost-efficient marketing solutions. We will continue our efforts to stay at the forefront of advanced technology and innovative solutions, fueling continued growth and further solidifying our competitive strengths."
Mr. Jun Zou, Chief Financial Officer, added, "We are delighted to report continued excellent progress of our core and new business initiatives, which resulted in solid revenue growth momentum, consistent market share gains, high profitability and a strong balance sheet. Given the continued demand for our core and new offerings, including media, leads generation, auto financing, and data products, we are confident in Autohome's leading brand position and our strategic endeavors to further monetize these four business pillars within China's tremendous automobile market."
Overview of Key Financial Results for Second Quarter 2018
Key Financial Results
Unaudited Second Quarter 2018 Financial Results
Net revenues in the second quarter of 2018 were RMB1,868.9 million ($282.4 million) compared to RMB1,422.3 million in the corresponding period of 2017.
- Media services revenues increased 24.5% to RMB930.2 million ($140.6 million) from RMB746.9 million in the corresponding period of 2017. The increase was mainly attributable to an increase in average revenue per automaker advertiser as automakers continue to allocate a greater portion of their advertising budgets to Autohome, with an increasingly diversified and optimized portfolio of products being offered.
- Leads generation services revenues increased 28.0% to RMB740.0 million ($111.8 million) from RMB578.1 million in the corresponding period of 2017. The increase was primarily attributable to a 18.2% year-over-year increase in average revenue per paying dealer as dealers continue to allocate a greater portion of their budgets to the Company's services, as well as an expanded dealer client base.
- Online marketplace and others revenues increased 104.2% to RMB198.7 million ($30.0 million) from RMB97.3 million in the corresponding period of 2017, primarily due to the increased contribution from auto-financing business and data products. Online marketplace and others revenues in the second quarter of 2018 consisted of revenues related to new car and used car marketplace, auto-financing business, data products and others.
Cost of Revenues
Cost of revenues increased 3.2% to RMB208.7 million ($31.5 million) from RMB202.2 million in the corresponding period of 2017. Excluding the cost of direct vehicle sales, cost of revenues would have increased 34.9% to RMB208.7 million ($31.5 million) from RMB154.7 million in the corresponding period of 2017. In addition, cost of revenues included share-based compensation expenses of RMB7.1 million ($1.1 million) during the second quarter of 2018, compared to RMB3.4 million for the corresponding period of 2017.
Operating expenses were RMB987.5 million ($149.2 million) in the second quarter of 2018, compared to RMB707.3 million in the corresponding period of 2017. The increase was mainly due to increases in sales and marketing expenses and product development expenses as the Company continues to reinvest in future growth opportunities.
- Sales and marketing expenses were RMB588.0 million ($88.9 million) in the second quarter of 2018, compared to RMB412.3 million in the corresponding period of 2017. The increase was primarily attributable to an increase in offline execution and branding expenses. Sales and marketing expenses for the second quarter of 2018 included share-based compensation expenses of RMB13.9 million ($2.1 million), compared with RMB13.7 million in the corresponding period of 2017.
- General and administrative expenses were RMB86.4 million ($13.1 million) in the second quarter of 2018, compared to RMB79.7 million in the corresponding period of 2017. The increase was primarily attributable to an increase in salaries and benefits. General and administrative expenses for the second quarter of 2018 included share-based compensation expenses of RMB15.7 million ($2.4 million), compared with RMB16.9 million in the corresponding period of 2017.
- Product development expenses were RMB313.1 million ($47.3 million) in the second quarter of 2018, compared to RMB215.4 million in the corresponding period of 2017. The increase was primarily attributable to an increase in salaries and benefits. Product development expenses for the second quarter of 2018 included share-based compensation expenses of RMB14.9 million ($2.3 million), compared with RMB12.3 million in the corresponding period of 2017.
Operating profit increased 31.8% to RMB748.4 million ($113.1 million) from RMB567.8 million in the corresponding period of 2017.
Income tax expense
Income tax expense increased 43.3% to RMB145.1 million ($21.9 million) in the second quarter of 2018, from RMB101.2 million in the corresponding period of 2017, primarily attributable to an increase in taxable income.
Net Income attributable to Autohome Inc. and EPS
Net income attributable to Autohome increased 33.6% to RMB691.6 million ($104.5 million) from RMB517.7 million in the corresponding period of 2017. Basic and diluted earnings per share/per ADS ("EPS") were RMB5.89 ($0.89) and RMB5.79 ($0.88), respectively, compared to basic and diluted EPS in the corresponding period of 2017 of RMB4.46 and RMB4.40, respectively.
Adjusted Net Income attributable to Autohome Inc. and Non-GAAP EPS
Adjusted net income attributable to Autohome Inc. (Non-GAAP), defined as net income attributable to Autohome Inc. excluding share-based compensation expenses and amortization expenses of intangible assets related to acquisitions, increased 31.7% to RMB744.3 million ($112.5 million) from RMB565.2 million in the corresponding period of 2017. Non-GAAP basic and diluted EPS were RMB6.33 ($0.96) and RMB6.23 ($0.94), respectively, compared to non-GAAP basic and diluted EPS in the corresponding period of 2017 of RMB4.87 and RMB4.80, respectively.
Balance Sheet and Cash Flow
As of June 30, 2018, the Company had cash and cash equivalents and short-term investments of RMB7,685.0 million ($1,161.4 million). Net cash provided by operating activities in the second quarter of 2018 was RMB333.5 million ($50.4 million), compared to RMB107.2 million in the corresponding period of 2017.
The Company had 4,030 employees as of June 30, 2018.
Strategic Investment in TTP Car Inc. ("TTP")
In the second quarter of 2018, Autohome completed a strategic investment in TTP, a company operating an online auction platform for used automobiles, Autohome invested US$100 million cash to subscribe to a three-year convertible bond issued by TTP, which bears an interest rate of 8% per annum. In addition, within three years after the closing, Autohome has the right to purchase additional 8.0% convertible bonds in an aggregate principal amount of up to $65 million to be issued by TTP upon Autohome's request from time to time.
Autohome currently expects to generate net revenues in the range of RMB1,850 million ($279.6 million) to RMB1,870 million ($282.6 million) in the third quarter of fiscal year 2018, representing a 30.8% to 32.2% year-over-year increase. If excluding direct vehicle sales, this represents a 32.3% to 33.7% year-over-year increase. This forecast reflects the Company's current and preliminary view on the market and its operating conditions, which are subject to change.
Starting on January 1, 2018, Autohome adopted a new revenue recognition accounting standard ASC 606. Under ASC 606, the most significant impact on Autohome will be the change of presentation of value-added tax from gross basis to net basis. The above guidance reflects revenues net of value-added tax under the new revenue recognition standard. If presented on gross basis including value-added tax, the same basis as that for the year 2017, net revenues are expected to be between RMB2,025 million ($306.0 million) to RMB2,045 million ($309.0 million) in the third quarter of fiscal year 2018.
Conference Call Information
The Company will host an earnings conference call at 8:00 AM U.S. Eastern Time on Wednesday, August 8, 2018 (8:00 PM Beijing Time on the same day).
Dial-in details for the earnings conference call are as follows:
Please dial in ten minutes before the call is scheduled to begin and provide the passcode to join the call.
A replay of the conference call may be accessed by phone at the following numbers until August 14, 2018:
Additionally, a live and archived webcast of the conference call will be available at http://ir.autohome.com.cn .
About Autohome Inc.
Autohome Inc. (NYSE: ATHM) is the leading online destination for automobile consumers in China. Its mission is to enhance the car-buying and ownership experience for auto consumers in China. Autohome provides professionally produced and user-generated content, a comprehensive automobile library, and extensive automobile listing information to automobile consumers, covering the entire car purchase and ownership cycle. The ability to reach a large and engaged user base of automobile consumers has made Autohome a preferred platform for automakers and dealers to conduct their advertising campaigns. Further, the Company's dealer subscription and advertising services allow dealers to market their inventory and services through Autohome's platform, extending the reach of their physical showrooms to potentially millions of internet users in China and generating sales leads for them. The Company offers sales leads, data analysis, and marketing services to assist automakers and dealers with improving their efficiency and facilitating transactions. As a transaction-centric company, Autohome operates its "Autohome Mall," a full-service online transaction platform, to facilitate transactions for automakers and dealers. Further, through its websites and mobile applications, it also provides other value-added services, including auto financing, auto insurance, used car transactions, and aftermarket services. For further information, please visit www.autohome.com.cn .
Safe Harbor Statement
This press release contains statements that may constitute "forward-looking" statements pursuant to the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will", "expects", "anticipates", "future", "intends", "plans", "believes", "estimates" and similar statements. Among other things, Autohome's business outlook, Autohome's strategic and operational plans and quotations from management in this announcement contain forward-looking statements. Autohome may also make written or oral forward-looking statements in its periodic reports to the Securities and Exchange Commission ("SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Autohome's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Autohome's goals and strategies; Autohome's future business development, results of operations and financial condition; the expected growth of the online automobile advertising market in China; Autohome's ability to attract and retain users and advertisers and further enhance its brand recognition; Autohome's expectations regarding demand for and market acceptance of its products and services; competition in the online automobile advertising industry; fluctuations in general economic and business conditions in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Autohome's filings with the SEC. All information provided in this press release is as of the date of this press release, and Autohome does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
Use of Non-GAAP Financial Measures
To supplement net income presented in accordance with U.S. GAAP, we use Adjusted Net Income attributable to Autohome Inc., Non-GAAP basic and diluted EPS and Adjusted EBITDA as non-GAAP financial measures. We define Adjusted Net Income attributable to Autohome Inc. as net income attributable to Autohome Inc. excluding share-based compensation expenses and amortization expenses of intangible assets related to acquisitions. We define Non-GAAP basic and diluted EPS as Adjusted Net Income attributable to Autohome Inc. divided by the basic and diluted weighted average number of ordinary shares. We define Adjusted EBITDA as net income attributable to Autohome Inc. before income tax expense/(benefit), depreciation expenses of property and equipment and amortization expenses of intangible assets and share-based compensation expenses. We present these non-GAAP financial measures because they are used by our management to evaluate our operating performance, in addition to net income prepared in accordance with U.S. GAAP. We believe these non-GAAP financial measures are important to help investors understand our operating and financial performance, compare business trends among different reporting periods on a consistent basis and assess our core operating results, as they exclude certain expenses that are not expected to result in cash payments. The use of the above non-GAAP financial measures has certain limitations. Share-based compensation expenses have been and will continue to be incurred in the future and are not reflected in the presentation of the non-GAAP financial measures, but should be considered in the overall evaluation of our results. These non-GAAP financial measures should be considered in addition to financial measures prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, financial measures prepared in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliation of non-GAAP and GAAP Results" set forth at the end of this press release.
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