Uxin (UXIN) Q1 2025 Earnings Call Transcript

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DATE

Friday, June 13, 2025 at 8 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — BK
• Chief Financial Officer — John Lin
• Chief Operating Officer — Jack Wang

TAKEAWAYS

• Retail Transaction Volume -- 4,090 units, up 31% sequentially and 142% year over year, reflecting the company's expansion in sales activity.
• Total Retail Vehicle Sales Revenue -- RMB 325 million, a 74% increase year over year, demonstrating leverage from higher units despite lower pricing.
• Average Selling Price (ASP) -- RMB 79,000, down from RMB 111,000 in the prior year, offset by record volume gains.
• Wholesale Transaction Volume -- 1,510 units, indicating a 3% year-over-year decline, with wholesale sales revenue at RMB 63.9 million.
• Total Revenues -- RMB 401 million, including both retail and wholesale operations for the quarter.
• Gross Margin -- 6.4%, stable sequentially and positioned for potential improvement as value-added services expand.
• Adjusted EBITDA Loss -- RMB 33.9 million, reduced by RMB 5.9 million quarter over quarter and by RMB 12.8 million, or 27%, year over year, indicating progress toward profitability.
• Inventory Turnover -- Approximately 30 days, markedly ahead of the industry average of 55 to 60 days, supporting sales efficiency.
• Net Promoter Score (NPS) -- 65, its highest result to date, after maintaining about 60 for nine consecutive quarters.
• Private Owner Vehicle Acquisitions -- Over 60% of sourced vehicles now come directly from individuals, providing margin advantage and supply chain benefits.
• Value-Added Services Penetration -- Higher utilization of high-margin products such as financing, insurance, extended warranties, accessories, and maintenance is underway to drive margin gains.
• Superstore Expansion -- Strategic partnership reached for new superstore in Zhengzhou, with negotiations ongoing for 1-2 more city entries.
• Capital Raise -- Recent $7.5 million financing agreement with DDI, aimed at funding inventory growth to support accelerating sales.
• Guidance for Next Quarter -- Projected retail transaction volume of 6,800 to 7,600 units (over 40% sequential growth), total revenues of RMB 480 million to RMB 500 million, and adjusted EBITDA loss narrowing to below RMB 10 million with goal for company-wide adjusted EBITDA profitability in the following quarter.
• Specific Cost Controls -- Fixed monthly expenses reduced by approximately RMB 2 million year over year, supporting improved operating leverage.

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RISKS

• Chief Financial Officer John Lin said, "It is true that our cash levels have been relatively low over the past few quarters," and confirmed ongoing reliance on external financing for inventory build and expansion.
• Ongoing competitive pricing in the new car market caused "a continuous decrease in the average transaction prices in the used car market," according to CEO BK. This reduces ASP and may pressure gross margin if not offset by volume and value-added services.

SUMMARY

Uxin Limited (NASDAQ:UXIN) reported surge in quarterly used car retail transaction volume and revenues, propelled by rapid store-level execution and inventory scaling. Management underscored a substantial rebound in demand as new car price competition abates, driving increased customer traffic and conversion. Ongoing capital raises and cost-cutting initiatives are integral to sustaining inventory growth and approaching profitability milestones.

• Chief Financial Officer John Lin stated, "As our sales and profitability have improved, both of our superstores are now adjusted EBITDA positive," highlighting operational progress at the unit level.
• Expansion initiatives now include a confirmed superstore project in Zhengzhou and active engagement with additional cities, supported by anticipated local government partnerships.
• Inventory levels are planned to double or triple from the beginning of the year by period-end, targeting wider vehicle selection and ongoing share gains.
• CEO BK noted that over 60% of vehicles are now sourced directly from individual owners, signaling a more resilient supply foundation and improved margin mechanics.

INDUSTRY GLOSSARY

• Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, excluding certain non-recurring or non-cash items, used to assess core operating profitability.
• Net Promoter Score (NPS): A customer loyalty and satisfaction metric indicating the likelihood of customers to recommend the company's services, expressed on a scale from -100 to 100.
• Superstore: Uxin's large-format offline retail location integrating vehicle display, sales, reconditioning, and service capabilities under one roof.

Full Conference Call Transcript

BK: Hello, everyone. Thank you for joining us today. I am pleased to reconnect with you all on the call and to facilitate communications with both domestic and international investors, I will share our company's latest progress in both Chinese and English. During the first quarter of fiscal year 2025, which covers April to June 2024, our superstore operations maintained strong momentum despite ongoing disruption in the used car market caused by aggressive pricing competition in the new car market. We achieved retail sales of 4,019 units per quarter, representing a 31% increase sequentially and an impressive 142% growth year over year. Our vehicle turnover efficiency also remained high, with inventory turnover days at approximately 30 days.

As our business continues on this rapid growth trajectory, customer satisfaction has also reached new heights. After maintaining the highest net promoter score in the industry for 9 consecutive quarters at around 60, we further improved this quarter, reaching an NPS of 65. Our customers increasingly recognize the quality of our products and the level of service we provide, further solidifying the competitive advantage of Uxin's offline superstore model. In our shareholder letter last quarter, we outlined our expectation to achieve adjusted EBITDA profitability company-wide by the December quarter of 2024. The strong business momentum over the past few months has brought us even closer to this goal.

Today, I would like to highlight three key areas we are focusing on to drive continued growth.

First, we are steadily increasing our inventory levels. Since June, the intensity of new car price wars has begun to ease, and consumer demand for used cars has gradually picked up. In response, we resumed expanding our inventories, and we expect to increase our inventory to 2 to 3 times its size at the beginning of the year by the end of 2024. This will provide a wider selection of vehicles to meet customer demand and drive continued retail sales growth over the next three quarters.

Second, we are increasing the proportion of vehicles we acquire from individual car owners. As our brand presence grows in the cities where our superstores are located, as well as in the surrounding areas, we are seeing a substantial rise in organic traffic from individual car owners looking to sell or trade in their vehicles. Currently, over 60% of the vehicles we acquire come directly from private owners, placing us at the forefront of the supply chain. This not only helps us to secure better pricing margins but also strengthens our competitive edge in regional markets.

Third, we are focusing on enhancing the penetration of value-added services. Through our one-stop shopping experience at our offline superstore and reconditioning centers, we continue to expand high-margin services such as financing, insurance, extended warranties, premium accessories, and vehicle maintenance. This strategy will further improve our overall gross margin.

In addition, we are continuing to expand our network of superstores, building on the success of our current business model. In July, we reached a strategic partnership with the local government in Zhengzhou to establish a new superstore in the city. We are also actively engaging with several other cities and expect to finalize 1 to 2 more strategic partnerships with local governments soon. This expansion will significantly enhance Uxin's market presence in new regions, driving further sales growth and improving our overall business performance. That concludes my updates for today. I will now turn the call over to our CFO, John, to discuss the financials in more detail. John, please go ahead.

John Lin: Thank you, BK, and hello, everyone. Since we have both domestic and international investors joining us today, I will be presenting our first quarter financial results for the fiscal year of 2025 in both Chinese and English. Looking back at the first quarter of fiscal year 2025, between April and June of 2024, we continued to experience some market disruptions due to the ongoing price wars in the new car market. However, the overall used car market has shown signs of recovery, with nationwide used car sales increasing by 6.4% year over year. Importantly, our offline superstore model is now fully operational and strengthened by our brand, product, and service capabilities, enabling us to achieve record sales in the quarter.

Our quarterly retail transaction volume reached 4,090 units, representing a 31% sequential increase and a significant 142% year-over-year growth.

The total retail vehicle sales revenue for the first quarter was RMB 325 million, reflecting a 74% year-over-year increase. The average selling price of retail vehicles decreased from RMB 111,000 in the same period last year to RMB 79,000 this quarter. The substantial increase in transaction volume offset the impact of the lower ASP on overall revenue.

On the wholesale front, our wholesale transaction volume in the quarter was 1,510 units, representing a slight 3% year-over-year decline, with total wholesale vehicle sales revenue of RMB 63.9 million. As a result of the above, our total revenues in the first quarter were RMB 401 million. Our gross margin was 6.4%, which remained stable compared to the previous quarter. With the market gradually recovering and the increased penetration of our value-added services, we anticipate further room for gross margin improvement going forward.

Our operational efficiency improved significantly, coupled with our continued focus on strict cost control. Our adjusted EBITDA loss for the quarter was RMB 33.9 million, reflecting a reduction of RMB 5.9 million from the previous quarter and a reduction of RMB 12.8 million or 27% year over year.

Looking ahead to the second quarter of fiscal year 2025, between July and September 2024, we expect the retail transaction volume to reach between 6,800 to 7,600 units, representing a sequential growth of over 40%. Total revenues are expected to be between RMB 480 million and RMB 500 million. We also anticipate that our adjusted EBITDA loss will narrow significantly to under RMB 10 million, and we remain confident in achieving positive adjusted EBITDA in the third quarter, which runs from October to December 2024.

Recently, we secured a $7.5 million financing agreement with DDI, a company listed on the Hong Kong Stock Exchange. This capital injection will further support the company's efforts to increase vehicle inventory, driving continuous growth in our retail sales. In the near term, our primary focus for capital allocation will remain on increasing inventory. In addition, we have other financing plans currently in progress, ensuring that we have sufficient capital to support the rapid growth of our future business. That concludes the prepared remarks for today. Thank you all. Operator, we are now ready to begin the Q&A session.

Operator: We will now begin the question and answer session. If you have a question, please press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Fei Dai with TF Securities. Please go ahead.

Fei Dai: Congratulations on the strong quarterly results and positive outlook. My first question is, can you elaborate on the specific factors driving the strong retail sales growth? And do you think this growth rate is sustainable? The second question is, we noticed that from the cautionary recall that the company's cash position as of June 30 is relatively low. Could you provide more detail on your financial management plans and how you will support such ambitious business goals? Thank you.

BK: This is BK. I will address your first question, and then John will address the second. There are three key factors driving the significant increase in sales. First is the overall used car market is starting to recover. Earlier in the year, the aggressive pricing competition in the new car market had a severe impact on the used car sector, with many consumers hesitant to make purchasing decisions. However, as we move into midyear, the price wars have begun to ease, and we have seen a noticeable rebound in demand for used cars. Second, as our operations have matured, we have built a stronger presence in the cities where our superstores are located.

Our brand, product offerings, and service capabilities have all improved significantly, leading to higher sales conversion rates. We have reached a tipping point where our growth is now accelerating. Third, as we observed the market recovering, we proactively extended our inventory levels, providing customers with a wider selection of vehicles. This enabled us to better meet consumer demand, resulting in higher sales conversion. Looking ahead, we expect sales growth to remain strong. For the next quarter, we are forecasting a sequential growth of over 40%. By the end of the year, we plan to increase inventory by 1 to 2 times compared to the beginning of the year, with total inventory reaching 3,000 to 4,000 units.

At the same time, we are confident in maintaining high inventory turnover levels, keeping us on a sustained growth trajectory.

John Lin: Hi, this is John. I will address your second question about cash. It is true that our cash levels have been relatively low over the past few quarters. However, our operating cash flow has improved significantly, and we have secured new investments to further enhance our liquidity. We are also very efficient with our cash usage. While ensuring operational stability, the majority of our funds have been directed towards increasing retail inventory. While our cash balance may seem low, it is important to note that our inventory levels have been steadily rising, which has fueled continued sales growth. Over the coming quarters, our primary focus for cash allocation, including the recent financing, will remain on boosting inventory levels.

Overall, we operate under two core financial principles: first, ensuring the company's financial position is secure, and second, fully supporting our business growth. This demands a high level of financial management, and we have made substantial efforts to both increase our cash inflow and manage expenses. As our sales and profitability have improved, both of our superstores are now adjusted EBITDA positive. We are transitioning from burning cash to generating cash. Meanwhile, our investors continue to show strong confidence in Uxin's business prospects. In early September, we secured $7.5 million in financing from DDI, and we have additional financing plans currently progressing as scheduled.

Also, we have implemented multiple rounds of cost-saving and efficiency-enhancing initiatives, resulting in a reduction of approximately RMB 2 million in fixed monthly expenses compared to the same period last year. As we expand into new regions, we will require additional funding for their launch and inventory buildup, which will primarily be supported by a combination of local government investment and our own capital. Based on our extensive experience in building and operating superstores, as well as favorable local policies, the startup costs for new stores are entirely manageable and remain at a very reasonable level. To summarize, our financial management remains solid and stable.

As we continue on our path towards long-term sustainable growth, we are confident in the ongoing improvement of our cash position. Operator, can we move on to the next question?

Operator: The next question comes from Gary with Water Power Research. He wanted to know that since the company has been talking about the easing of price competition in the new car market, can you share more about your recent observations on market conditions and how consumer demand for used cars is evolving in the current economic environment?

BK: Hi, this is BK. Thank you for the question. That is correct. The price wars in the new car market have been quite intense over the past year, and this year's economic conditions have posed significant challenges. Sales growth for new cars in the first half of this year was only around 5%, and we have observed that several popular models have experienced price cuts 3 to 4 times since the first quarter of last year, with price cuts reaching around 30%.

These aggressive pricing strategies in the new car market have naturally led to a continuous decrease in the average transaction prices in the used car market, where our current average sales price per vehicle is just over RMB 70,000. We believe that in the long run, these lower vehicle prices have opened up a broader market, enabling more consumers to purchase better vehicles with a smaller budget. This dynamic is also causing consumers to increasingly view used cars as a high-value purchasing option. Regardless of the economic situation or market environment, consumer expectations for product and service quality are consistently increasing. Within the market, there is a demand for superior used car dealerships.

Our integrated model of offline superstores and online national sales capabilities can fulfill the broadest consumer needs, and we are highly recognized for our services. With an average sales turnover of about 30 days, which is significantly faster than the industry average of 55 to 60 days, our sales growth and customer satisfaction, as measured by our leading net promoter score, both consistently exceed industry averages. Therefore, no matter how market conditions fluctuate, we are confident in our business operations maintaining a trajectory of continuous improvement with new breakthroughs each month. That concludes our response to Water Power Research's question. Operator, can we move on?

Operator: Yes. This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.

Jack Wang: Alright. Thank you again for joining today's call and for your continued support in Uxin. We look forward to speaking with you again in the very near future. Thank you.

Operator: The conference has now concluded. Thank you for attending today's presentation.

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