Autohome ADR Stock

Ladies and gentlemen, thank you for standing by for Autohome's Third Quarter 2026 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference call is being recorded. If you have any objections, please disconnect at this time. A live and archived webcast of today's call will be available on Autohome's IR website.

It is now my pleasure to introduce your host, Sterling Song, Autohome's IR Director. Please go ahead, Mr. Song.

Thank you, operator. Hello, everyone, and welcome to Autohome's third quarter 2026 earnings conference call. Earlier today, Autohome distributed its earnings release, which can be found on the company's IR website at ir.autohome.com.cn. Joining me today on today's call is our Chief Financial Officer, Ms. Craig Yan Zeng. Management will go through the prepared remarks first, which will be followed by a Q&A session where they will be available to answer all your questions.

Before we begin, please note that today's discussion contains forward-looking statements made under the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange. Autohome undertakes no obligation to update any forward-looking statements, except as required under applicable laws.

Please also note that Autohome's earnings press release and today's conference call include discussions of certain unaudited non-GAAP financial measures. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures can be found in our earnings release.

I will now turn the call over to Autohome's CFO, Mr. Craig Yan Zeng, for opening remarks. Craig, please go ahead.

[Interpreted]

Thank you, Sterling. Hello, everyone. This is Craig Zeng, CFO of Autohome. Thank you for joining our earnings conference call today.

In the third quarter, we made solid progress in upgrading towards a comprehensive automotive service ecosystem with our innovative businesses developing steadily. On the user side, we stepped up our efforts to systematically develop our content and the tool matrix, our user base maintained stable year-over-year growth, further strengthening our platform moat. On the innovative business side, our new retail business refined its model and scaled up its service network, further broadening its city coverage. Our used car business advanced the development of both domestic and overseas platforms. Our full process used car sales service platform continued to improve its standardized service system, while our cross-border used car export service platform achieved growth in both the supply of quality vehicles and export transaction volumes.

In early September, we officially launched our proprietary automotive service AI agent application, Cheese Car Butler by deeply integrating AI capabilities with our dual service ecosystem of users and merchants. We are driving the shift in automotive services from purely information matching towards trusted decision-making and reliable fulfillment. This also represents a key strategic innovative for Autohome in the AI plus automotive services' sector.

On content, we continue to advance our brand recognition. In partnership with Mango Excellent Media, Autohome produced a variety entertainment Gala, August 18 Global Automobile Festival, which was broadcast across platforms. The Gala featured celebrity and influencer challenge quizzes and other interactive format, driving traffic growth and raising brand awareness. The live broadcast event was received positively with total impressions across all channels exceeding 1.8 billion.

On the product side, our vehicle model library launched the at a Glance feature, which helps users understand the vehicle in a single glance by tracking and integrating scattered vehicle information into a single image covering 8 major highlights and 5 scenario-based tools for each vehicle. This allows users to understand the key selling points of a vehicle more quickly and intuitively. In parallel, to address the complexity of configuring new energy vehicles, we also launched the Configuration Selector tool, which simplifies the configuration selection process and lowers the barrier to decision-making for users.

According to QuestMobile data, Autohome's average mobile DAUs grew 3.4% year-over-year to 79.14 million in September. This report also showed that Autohome ranked first by citation rate as an automotive information source across 6 major AI platforms for 3 consecutive months from June to August. This demonstrates that the professional content accumulated by Autohome over the years continues to be valued now in new information service scenarios.

In the new energy vehicle sector, we accelerated the build-out of our dealer ecosystem across all channels and regions. By the end of the third quarter, Autohome Mall's online car purchasing model has reached 38 cities nationwide with more than 1,700 authorized dealers and over 600 vehicle series listed on the platform. This large-scale authorized dealer network has broadened vehicle supply, removed regional barriers to car purchases and strengthened the online automotive e-commerce transaction chain. Meanwhile, Autohome Good Car steadily expanded its offline footprint and store count. At the end of the third quarter, Autohome Good Car had over 170 franchise stores with cumulative transactions of over 700 vehicles. As new retail offline channels take shape and our footprint across higher and lower cities develops, Autohome's transaction service system is becoming increasingly complete with our online assets and offline channels working synergistically, the network effects of our O2O ecosystem are beginning to emerge.

Our AI and large language models, we officially launched our AI native application, Cheese Car Butler on September 5. The product is built on our proprietary Cangjie Automotive large language model, it covers the entire user journey of browsing, selecting, buying and using vehicles, leading intelligent online consultations with offline store services. For users, Cheese Car Butler aggregates extensive reviews and word-of-mouth data from real car owners to offer credible references for car purchase decisions. It also integrates one-stop services, including incentives and discounts, test drive appointments, fixed price transactions, valuation and price comparison, on-site inspections, charging and maintenance fulfillment to support users throughout the entire vehicle life cycle.

For merchants, the product covers mainstream 4S dealerships, used car dealers and automobile service providers across the industry, empowering dealers and aftermarket service providers in their digital operations. Cheese Car Butler is an innovative product that combines Autohome's long accumulated automotive content, data, industry resources and user service experience with AI capabilities. Going forward, we will continue to refine the user experience and improve service quality, making it easier for users to access authentic information and find the offline service resources they need.

Our used car business, we focused on the full process car scale service platform and launched pilot operations in Nantong and Changzhou at the beginning of the year. During the pilot period, both transaction efficiency and user satisfaction saw improvements, preliminary proving the feasibility of our business model. In the third quarter, we expanded the pilot to 6 cities through refined operations tailored to regional markets. We continue to hone our standardized service system, laying a solid foundation for replicating the model nationwide. For cross-border export service platform, we strengthened the integration of our online multilingual international sites and our offline fulfillment networks by connecting online vehicle supply displays and inquiry conversion with offline vehicle condition verification, customs clearance and logistics. We improved the collaborative efficiency of the entire cross-border transaction process. We also continue to expand our supply of high-quality vehicles.

In the third quarter, the platform averaged more than 3,000 vehicles listed for sale online each day. Since the platform completed its first export order in July, monthly transaction volume has continued to rise, demonstrating very sound business momentum. Overall, the full process car sales and cross-border export service platforms are developing steadily with model validation, regional expansion and operational chain efficiency improvements progressing in parallel, building momentum for further expansion and nationwide deployment.

In summary, we further solidified our traditional information platform, reinforcing user mindshare and our traffic base while actively developing our transaction business and accelerating the deployment of AI agent applications to build a differentiated competitive advantage. At the same time, in keeping up with our long-standing commitment to maximizing shareholder value, our Board approved a cash dividend plan for the second half of the year, and we continue to actively repurchase shares in the open market. Looking ahead, we will continue to invest in key strategic priorities that can strengthen our long-term competitiveness while maintaining a streamlined cost structure, creating sustainable value for users, customers and shareholders through a more efficient automotive service ecosystem.

With that, let me briefly walk you through the key financials for the third quarter of 2026. Please note that all amounts discussed today are in RMB unless otherwise stated.

Net revenues for the third quarter were RMB 1.31 billion. Specifically, media services revenues were RMB 241 million. Lead generation services revenues were RMB 526 million and online marketplace and others revenues were RMB 547 million.

With respect to costs, cost of revenues in the third quarter was RMB 431 million compared with RMB 646 million in the third quarter of 2025. Gross margin in the third quarter was 67.2% compared with 63.7% in the same period last year.

Turning to operating expenses. Sales and marketing expenses in the third quarter were RMB 575 million compared with RMB 620 million in the third quarter of 2025. Product and development expenses were RMB 195 million compared with RMB 279 million in the third quarter of 2025. General and administrative expenses were RMB 91 million compared with RMB 125 million in the same period last year.

Overall, operating profit was RMB 96 million in the third quarter compared with RMB 147 million in the same period of 2025. Adjusted net income attributable to Autohome was RMB 253 million in the third quarter compared with RMB 407 million in the corresponding period of last year.

Non-GAAP basic and diluted earnings per share in the third quarter were RMB 0.61 and RMB 0.66 respectively, compared with RMB 0.87 and 0.86 in the corresponding period of 2025. Non-GAAP basic and diluted earnings per ADS in the third quarter were RMB 2.43 and RMB 2.42, respectively, compared with RMB 3.47 and RMB 3.45 respectively in the corresponding period of 2025.

As of September 30, 2026, our balance sheet remains robust. Cash, cash equivalents, short-term investments and other long-term investments totaled RMB 17.65 billion. Net cash provided by operating activities for the third quarter was RMB 360 million.

On July 28, 2026, our Board of Directors authorized a share repurchase program under which we may repurchase up to USD 400 million of Autohome ADS over the next 12 months. As of October 30, 2026, we have repurchased approximately 7.06 million ADS for a total cost of approximately USD 155 million.

In addition, in accordance with our dividend policy, our Board has approved a cash dividend of USD 1.58 per ADS or USD 0.395 per ordinary share payable in U.S. dollars to holders of ordinary shares and ADS of record as of the close of business on January 5, 2027. The aggregate amount of the dividend will be approximately RMB 1 billion and is expected to be paid for holders of ordinary shares and ADS of the company on or around March 15, 2027, and March 22, 2027, respectively.

That concludes our financial summary. Now we are ready to open up the Q&A session.

Operator, please open up the line for the Q&A session.

[Operator Instructions] And our first question comes from the line of Brian Gong from Citi.

[Interpreted]

I have 2 questions. First is what's our view on the auto sales industry right now? And do you expect a recovery for the industry for next year? And is there any change for the industry trend? And secondly, what is the progress on our offline store currently? Could you share your plan over short term and medium term?

[Interpreted]

Thank you for your question. First, we do expect the domestic auto market remain under pressure in the short term. And -- but we believe it is already at the bottom for the moment. For next year, we believe there is likely to be some kind of recovery and stabilization.

This year in the third quarter, we didn't see the euro strength from the traditional golden September or October is a strong sales season. This is partly because first, the high base of last year's subsidy policies and the subsidy induced demand pull back, pull forward as well as the consumer sentiment decreased such factors, et cetera. And for this year, the full year retail sales of passenger vehicles is projected to be 18.5 million units, which is a decrease of 22% year-over-year. So this means that the overall retail sales in the fourth quarter is still to be -- to decline by 20% to 25% year-over-year.

The China Passenger Car Association, which is CPCA, it forecast that the domestic passenger vehicle retail sales will grow between 0% to 5% next year. The middle point is approximately 2%. And so this is in line with our judgment as we communicated with the market or investors in the past, our forecast is a low single-digit increase for the China auto market. So this is in line with our judgment and forecast.

And for the auto industry next year, we have several key judgments or observations. First is that the overall sales are expected to remain relatively stable and the growth will continue to be driven primarily by the NEV, New Energy Vehicles. The NEV penetration rate in September has reached a record high of 67%. And going forward, the leading domestic automakers are likely to strengthen their market position, market shares while the weaker brands or weak players may face more accelerated wave of market consolidation and the market exits. And on the cost side, there's a high international oil price. So it may also weigh on consumer demand for the traditional ICE part.

And profitability across the auto industry will still remain under considerable pressure. For the first 9 months this year, the industry -- the auto industry profit margins has been compressed to 3.3%. So the strategy of simply relying on the price cut, price reduction to drive sales is becoming more and more difficult. And those leading automakers or leading brands with strong technological capabilities and strong overseas operations, they are likely to be the first to return to better profitability, while those weaker brands or weaker players in the industry will continue to exit the market. So the channels are also shifting away from the selling cars, making money to relying on turnover and rebate for continuous operations. So the pressure is -- we believe the pressure is mostly concentrated on those joint venture brands especially ICE vehicles and some weaker second-tier brands as well as dealers with more fragile financial condition.

And for industry growth drivers, they are shifting from the domestic purchase towards replacement demand and overseas exports. Overseas exports are expected to maintain a strong growth momentum this year. At the same time, automakers' international expansion strategy will gradually evolve beyond simple exporting finished complete vehicles to include overseas manufacturing facilities or localized supply chains and more comprehensive brand operations in international market, et cetera.

So in summary, we believe in the future, the auto market will face both challenges and opportunities. Domestic demand will remain under pressure, and the industry has entered a period of deep structural adjustment characterized primarily by the competition for existing market shares. And market share is expected to concentrate among those leading brands or leading companies with core technological capabilities or comprehensive ecosystem deployment and strong brand equity.

And for Autohome, we will continue to invest in several key areas, which include content, AI agents and end-to-end platform for vehicle purchasing and selling services and cross-border service platform, et cetera. Our goal is to provide users with more convenient and efficient services throughout the entire vehicle ownership life cycle covering the car browsing, selecting, buying and using. And we will also help our business -- customers navigate changes in the industry by improving transaction conversion, driving the sales growth and reducing their costs. So this will be the core direction we will explore and develop in the future.

In the past several quarters, we have been focusing on expanding our offline retail network. In high-tier cities, we are expanding our city coverage and diversifying the supply of vehicles through the authorized dealerships. We currently have more than 1,700 participating dealerships. And in those low-tier cities, we are strengthening our service capabilities in low-tier markets through the Autohome Good Car franchise stores with more than 170 franchise locations currently in operation.

While the number of our stores is one important metric, but we place even greater emphasis on the channel quality and on the ability to achieve business synergies. Our core objective is to build an offline fulfillment network centered on Autohome Mall gradually establishing an integrated service network comprising of Autohome Mall plus authorized dealers plus Autohome Good Car franchise stores plus CARtech synergies. As online traffic and vehicle supply continues to increase, continues to grow and our offline distribution network becomes increasingly established, so the coordinated development of our online to offline transaction ecosystem will enable us to better meet the needs of both our business partners and our users.

The next question, please.

And our next question comes from the line of Chen Yang from CICC.

[Interpreted]

I have 2 questions. The first one is about over the past few years, the company has been very proactive in shareholder returns. Could we expect the company to maintain a similar pace and scale of shareholder returns going forward? The second one is, given the challenging industry environment, how have new energy vehicles brand has been performing?

[Interpreted]

Okay. Thank you for your question. Autohome has always placed great importance on the shareholder return and the market cap management for a long time. We have established a good shareholder return framework, combining a regular dividend policy with share repurchase. On the share repurchase or share buyback, at the end of July this year, we completed our USD 200 million share repurchase program, which was announced in early March, quite ahead of schedule. And in July, the company's Board of Directors authorized a new share repurchase program with a duration of 12 months and a total value of USD 400 million. As of the end of October, last month, approximately USD 155 million or nearly 40% of the authorized amount has already been executed. So going forward, we will continue to actively execute the share buyback program in the open market in accordance with our established strategy.

On the cash dividends, at the end of July this year, we successfully completed the distribution of approximately RMB 500 million dividends to shareholders. The RMB 1 billion dividend program announced today will be completed in the first quarter of next year. And of course, we will be sure to keep shareholders informed in a timely manner of any future progress or update in our dividend policy.

Autohome has ample cash reserves, and we keep a healthy balance sheet. We have also made notable progress in the new retail business, used car transactions as well as the AI agents. So going forward, we'll continue to optimize our operating efficiency while maintaining a disciplined and a prudent approach to our business investment.

For the NEV. So in terms of sales volume and the penetration of NEV brand, in this September, the NEV penetration rate has already reached as high as 67%, which is 2/3. So in the first 9 months of the year, although the NEV retail sales fell 13% year-over-year, but it still outperformed the overall new vehicle market, so it demonstrates a lot of resilience. So during the first 9 months of the year, the top 10 NEV brands accounted for 72% of total NEV retail sales volume. So half of that are from the traditional automakers.

From an industry landscape perspective, the brand differentiation remains quite clear, very evident. Although the overall NEV sales declined, so some brands, they still delivered a strong year-over-year growth in the first 9 months. So this is attributable to those brands early product lineup planning and their channel buildup.

Next question, please.

We will now take our next question from Thomas Chong of Jefferies.

[Interpreted]

Can you just share an update on the progress of the company's used car business.

[Interpreted]

Okay. Thank you for your question. For our used car business, it is currently making progress along the 2 parallel tracks. One is the domestic market, the other is the overseas market. Our domestic full process used car sales service platform is upgrading from an information matching platform to a standardized transaction platform. From customer acquisition, we cover the entire chain of services from appointment scheduling, vehicle inspection, buyer and seller matching and then to final delivery.

On customer acquisition, we cover both on-platform and off-platform customer acquisition channels. On the appointment scheduling, we can provide dedicated one-on-one customer service representatives. On the vehicle inspection, we can offer 265 professional inspection items benchmarked against the industry standards, providing a comprehensive vehicle condition assurance system.

On the matching buyers with sellers, we can leverage our Cangjie large language model to intelligently match vehicles based on dealers' operational preferences as well as TTP to conduct nationwide auction. And finally, we provide other services for online agreement signing and ownership transfer, et cetera.

So in the third quarter, we piloted this standardized end-to-end vehicle selling service model in 6 cities across China. Initial results in terms of transaction conversion and the user satisfaction have been quite encouraging. So we will further refine this model and replicate nationwide in the future.

For our cross-border export services platform, we are focused on improving the vehicle supply and operational efficiency. Following the successful completion of our first end-to-end export transaction in July, so the number of transactions has increased month by month in the past few months. But of course, the total volumes are still relatively smaller amount. And we are still working to optimize coordination between our online international platform and our offline fulfillment network. And hopefully, we can improve the operational efficiency in the future. And for our existing information services, auction services and data services, they are all established business lines and continue -- still continue to develop. And the overseas business represents additional growth opportunities for us.

Next question, operator.

Our next question comes from the line of Ritchie Sun from HSBC.

[Interpreted]

I would like to ask how does management assess the challenges and opportunities brought by AI agent to the traditional business? And what are the actual impacts that have already been felt or realized in our revenue and cost?

[Interpreted]

Thank you for your question. On the impact of AI agents on our traditional automotive industry business from 2 levels. Level 1 is from the user interaction level. AI agents have become the new central hub connecting the users with services with conversational interactions increasingly replacing traditional platform entry points. And second, from the service delivery level, AI agent enables intelligent service distribution. So traditional service models used by vertical automotive media platforms, which have historically focused on content placement and a broad market coverage must evolve towards more precise targeting.

And for Autohome, we have made some achievements of progress in the AI. Here, I can give you several examples. One example is the Cheese Car Butler, which was officially launched September of this year. It enables users to find service providers they need and also enables offline service providers to find online users. Another example is our Cangjie large language model, which serves as our underlying technology foundation. It enables us to establish a comprehensive AI empowerment framework, which can improve internal staff efficiency and empower business partners and enhance services for users.

So the investment in technology and products are already reflected in our financial statements and financial results. However, AIs are not already begun to generate revenue in scale. Instead, they serve as the underlying technological capabilities across our various products. helping us optimize the product offerings and improve operational efficiency. So in this way, AI can support and strengthen our existing revenue generating more business. Thank you.

Thank you. We have now come to the end of the Q&A session. I'll now turn the call back to management for closing remarks.

[Interpreted]

Thank you very much, everyone, for joining us today. We look forward to speaking with you again on our next quarter's conference call and to sharing the latest updates on Autohome's corporate strategy and business development. Should you have any questions or suggestions, please feel free to contact us at any time. Thank you very much. Goodbye.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Ladies and gentlemen, thank you for standing by for Autohome's Second Quarter and Interim 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. If you have any objections, please disconnect at this time. A live webcast of today's call will be available on Autohome's IR website. It is now my pleasure to introduce your host, Sterling Song, Autohome's IR Director. Mr. Song, please go ahead.

Thank you, operator. Hello, everyone, and welcome to Autohome's Second Quarter and Interim 2026 Earnings Conference Call. Earlier today, Autohome distributed its earnings release, which can be found on the company's IR website at ir.autohome.com.cn. Joining me on today's call is our Chief Financial Officer, Mr. Craig Yan Zeng. Management will go through the prepared remarks first, which will be followed by a Q&A session where they will be available to answer your questions.

Before we begin, please note that today's discussion contains forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to those outlined in our public filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange. Autohome undertakes no obligation to update any forward-looking statements, except as required under applicable laws.

Please also note that Autohome's earnings press release and today's conference call include discussions of certain unaudited non-GAAP financial measures. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures can be found in our earnings release.

I will now turn the call over to Autohome's CFO, Mr. Craig Yan Zeng for opening remarks. Mr. Zeng, please go ahead.

[Interpreted] Hello, everyone. This is Craig Zeng, Chief Financial Officer of Autohome. Thank you for joining our earnings conference call today. In the second quarter, our innovative business continues to make steady progress driving Autohome's upgrade towards a comprehensive automotive service ecosystem for our new retail business with the authorized dealer model in pilot operation and expanding into more cities. We launched the off-line franchise chain brand, Autohome Good Car, further extending our off-line service network. In addition, our global expansion into used car trading is advancing strategy. Our cross-border export platform completed its first transaction in July, providing valuable experience to further expand our service capabilities.

We also made major strides in AI, particularly in cutting-edge AI agent technology. In early July, we unveiled our proprietary intelligent agent product Cheese Car Butler and open it for public data as the automotive industry's first stand-alone agent product, it represents not only a pioneering exploration of intelligent applications but also a key milestone in enriching our product portfolio and establishing a differentiated competitive edge for us. Specifically, in the second quarter, we made solid progress across content offerings, product capabilities and traffic alliances. On account of that, in May, we launched our annual IP China Intelligent Manufacturing Exploration Plan jointly created with the News and Publicity Center of the Ministry of Industry and Information Technology. Six episodes will be released throughout the year, covering exciting technological trends including the low-altitude industry intelligence cockpits, intelligence driving and embodied AI, the premier episode focused on flying cars combining immersive visits to the front line of intelligence manufacturing with a fresh, innovative use our story-telling perspective to make cutting-edge technologies more relatable and engaging for younger users.

This series also marks our first major content initiative following Autohome's brand refresh. Since launch, the program sparked lively discussion on social media, was covered by our 20 leading media outlets and generated over 70 million views across various platforms. On the product side, we launched our intelligent driving channel, which systematically profiled the intelligence driving capabilities of nearly 200 mainstream models and provide easy comparisons to help users understand differences across models and those cars efficiently. In addition, we continue to advance collaboration across our multi-platform, multi-scenario traffic ecosystem. A notable example was our partnership with Alipay in June and which our mini program became the true provider of comprehensive automotive services for Alipay's auto live channel, offering differentiated content to match the varied needs of first-time buyers, repeat buyers and those upgrading their vehicles.

According to Questmobile, in June, our daily active users steadily increased year-over-year. reaching $76.5 million. In the new energy vehicle sector, in late April, we launched a pilot online car purchase model in Shenzhen and Xi'an in partnership with authorized dealers. Under this model, local partners, dealerships posted competitive pricing on the mall enabling consumers to select the vehicle and place a deposit online and then complete the contract signing and delivery off-line. During this pilot period, over 400 dealers gone across these two cities, offering more than 1,000 models and over 1,000 transactions were completed within 70 days receiving positive feedback from both our dealer partners and users.

Based on the experience gained from the pilot cities in the second quarter, we replicated this model to three additional cities, Suzhou, Jinan and Shandong, steadily broadening our network coverage in Northern and Eastern China. At the same time, to address the service gap in low-tier cities we launched our off-line franchise chain brand, Autohome good car at the end of June with a focus on the underserved low-tier cities to precise traffic redirection and the standardized operating under management systems and streamlined resource support system will help dealerships in low-tier cities achieve scalable growth.

At present, over 100 franchise stores joined Autohome Good Car. Going forward, the Autohome APP will remain the core of our online customer acquisition efforts while offline Autohome Good Car franchisees and authorized dealer stores will handle vehicle delivery. Through standardized services, we aim to support users throughout the entire vehicle life cycle from vehicle discovery, selection to purchase and ownership. AI and the models powered by Autohome's proprietary large language model, we launched Cheese Car Butler, our intelligent agent product for the automotive vertical. The agent leverages our core assets accumulated in the automotive field, including our professional content, product database, MCN ecosystem and offline service network to provide users with a broad range of services, including multidimensional vehicle comparisons, vehicle purchase guidance and maintenance services, et cetera, establishing a unique, differentiated, competitive advantage.

Currently, Cheese Car Butler is available to users and has entered the feedback collection phase with the initial market response being positive. In the future, we will continue to enhance the underlying model capabilities, optimize the product's interactive experience and gradually integrate more offline service resources to steadily improve the product value and service quality.

In the used car business, we continue to develop both our core domestic and overseas platforms for our full process used car sales service platform. We continue to improve service quality through greater standardization. Recently, we completed an upgrade and in duration of our vehicle inspection system, expanding the number of inspection items from 128 to 265 including 82 newly added assessments specifically designed for new and used vehicles, further improving the accuracy and the reliability of our inspection reports. For our cross-border used car export service platform, we formally obtained the official export qualifications during the second quarter. We also established an online multilingual international website and an offline fulfillment network with business leads spanning over 100 countries.

In early July, we successfully completed the first used car export order on our platform, making a breakthrough from zero to one for our business. In the next phase, we will focus on three key areas: high-quality vehicle supplies upstream; expanding overseas customer acquisition downstream; and improving platform operational efficiency. All of this supports our all-out efforts to create a new one-stop channel for used car exports.

In summary, since the beginning of the year, we achieved meaningful progress across all businesses. While steadily managing our businesses, we've consistently delivered on our commitment to shareholder returns, the USD 200 million stock buyback program announced in March 2026 was completed ahead of schedule in less than 6 months. In late July, we announced a new 12 months USD 400 million repurchase plan, demonstrating our strong confidence in the company's long-term value. In addition, the RMB 500 million cash dividend for the first half of the year was distributed at the end of July.

Looking ahead, we will continue to deepen our new business development, provide high-quality services to users and partners and deliver sustainable returns to our shareholders.

With that, let me briefly walk you through the key financials for the second quarter of 2026. Please note that I will reference RMB only in my discussion today, unless otherwise stated. Net revenues for the second quarter were CNY 1.2 billion. To break it down further, Media Services revenues were CNY 280 million. Lease generation services revenue were CNY 560 million, and the online marketplace and others revenues were CNY 357 million. With respect to costs, cost of revenue in the second quarter was CNY 274 million, compared with CNY 503 million in the second quarter of 2025. Gross margin in the second quarter was 77.1% compared with 71.4% in the same period last year.

Turning to operating expenses. Sales and marketing expenses in the second quarter were CNY 552 million, compared with CNY 630 million in the second quarter of 2025. Product and development expenses were CNY 223 million compared with CNY 263 million in the second quarter of 2025. General and administrative expenses were CNY 96 million compared with CNY 133 million in the same period last year.

Overall, we recorded an operating profit of CNY 130 million in the second quarter compared with CNY 297 million in the same period of 2025. Adjusted net income attributable to Autohome was CNY 277 million in the second quarter compared with CNY 476 million in the corresponding period last year. Non-GAAP basic and diluted earnings per share in the second quarter were CNY 0.62 and CNY 0.61, respectively, compared with CNY 1.01 for both in the corresponding period of 2025. Non-GAAP basic and diluted earnings per ADS in the second quarter were both CNY 2.46 compared with CNY 4.06 and CNY 4.04, respectively, in the corresponding period of 2025.

As of June 30, 2026, our balance sheet remains robust. Cash, cash equivalents, short-term investments and other long-term investments totaled CNY 19.36 billion. We generated net operating cash flow of CNY 261 million in the second quarter of 2026. On March 5, 2026, our Board of Directors authorized a share repurchase program, under which we are committed to purchase up to USD 200 million of Autohome's ADS over a period not to exceed it as of July 30, 2026. We have completed this share repurchase program ahead of schedule with a total approximately [ USD ] 10.63 million ADS repurchased.

In addition, on July 28, 2026, our Board of Directors authorized a new share repurchase program under which we may repurchase up to USD 400 million of Autohome ADS over the next 12 months as of August 14, 2026. We had repurchased approximately USD 1.9 million ADS for a total cost of approximately USD 43.6 million.

That concludes our financial summary. Now we are ready to open up the Q&A session. Operator, please.

[Operator Instructions] Your first question comes from the line of Thomas Chong of Jefferies.

[Interpreted] I have two questions. The first one is about the auto industry, which is softer than market expectations. Can management comment about the second half industry outlook? And my second question is about the export of used car business. Can management comment about our competitive edge and the latest business progress?

[Interpreted] Thank you for your question. I will answer your question. Since the beginning of this year, the overall retail sales in the auto market has remained under pressure. In the first 7 months, domestic retail sales of passenger vehicles declined by 20% year-over-year, while the domestic new vehicle sales fell by 22% year-over-year in Q2. Even the new energy vehicle, EV, which has previously been the primary growth driver, it already see a sales decline of 8% in Q2 year-over-year for consecutive periods. And the traditional ICE that is internal combustion engine vehicles performed even worse. The sales declining 38% year-over-year in Q2. At the same time, the industry -- the auto industry profitability has been deteriorated in the first half of the year. The profit for the auto manufacturing industry declined by 20% year-over-year, with the profit margin at just 3.8%, which is a historical low.

The market expectations for the overall industry sales at the beginning of the year was optimistic. But now this expectation has been revised downward. The China Passenger Car Association, CPCA, now forecast that the full year for 2026 passenger vehicle retail sales will decline by 16% year-over-year. So it brings the overall total annual sales to fill them 20 million units. So this means that the overall China auto market will continue to face quite a lot of pressure in the second half this year. And we expect the auto industry to be characterized by a combination of weak domestic demand, structural differentiation and exports providing support.

From the industry level, we can see the new energy transition is accelerating and auto export is becoming a new growth driver. So for the China auto market, now it has entered into an existing market stage with a weak domestic demand are becoming a major problem -- major constraint on growth. And at the same time, you can see the penetration rate for EV continue to pick up.

So in April, it is -- the penetration rate is 60%. And now in July, it climbed further to a new high of 65%. So in contrast to the weak domestic demand, the auto export has maintained a strong growth momentum. During the first 7 months of 2026 passenger vehicle exports increased by 74% year-over-year with EV accounting for more than half of the total export volumes. And with the weak domestic demand and strong overseas growth simultaneously, auto exports has become a key engine for automakers to offset the weak domestic demand and drive profit growth. From the market level, we can see there's an increasing structure differentiation and the consumers are increasingly in a mode -- they are in a mode of wait and see.

So currently, the market is experiencing clear structural differentiation across segments by price range, you can see the old market is diverging at both ends. The entry-level market for vehicles priced below RMB 50,000 has contracted sharply declining 55% year-over-year in the first half. On the other side, sales of high-end EV priced above RMB 400,000 surged 46%, demonstrating greater market readiness. So overall, the sales of traditional ICE and low-end EVs continue to decline, while the middle to high-end EVs have emerged as a growth segment.

So in summary, the auto market in the first half of this year can be characterized as cold domestically, hot overseas. Domestic demand weakened year-over-year, while EV penetration continued to increase, and auto exports became the primary growth driver for the overall industry as China's auto market enters an existing market competition stage. Currently, only those companies who can capture consumers' needs throughout their entire life cycle and provide value-added services across the entire customer journey will be best positioned for the future developments in the transforming period in the market. So this is also one of the key areas we will continue to focus on and explore going forward.

The second question about the used car export, the used car export market is sufficiently fragmented with a sufficiently large and diverse supply of used car vehicles. So this is favorable for us to build our long-term competitive advantage and sustainable barriers for entry. And if the market was more highly concentrated, it would be more difficult for platform companies.

And for our advantages in this area, first is the brand, strong brand from Autohome, we are the leading auto vertical media platform. So we have a strong brand recognition and credibility and also, we are newly listed. This also help us in our brand. Second is the stable supply, used car vehicle supply and a standardized system. We have access to a stable and compliant supply of used cars supported by a standardized industry-led vehicle inspection system, which can enable comprehensive assessments of the vehicle condition. So overseas buyers value accurate and complete and comprehensive vehicle inspection report as well as those maintaining and insurance claims record.

So Autohome can provide a base. So this gives overseas buyers greater confidence in their purchase process. Third is the digital one-stop service. This is our advantage. We leverage our online digital tools to improve the operational efficiency, including the 24/7 customer support, those matching of the vehicle supply and those multilingual website services, et cetera. So all these capabilities facilitate more effective communication between buyers and sellers. For our business program update on the used car in the second quarter, we just mentioned we officially obtained the government qualification for the used car exports. And we successfully completed the first used car export transaction on our platform.

So this represents an important zero to one breakthrough for this business segment. And for the work ahead of us, on one hand, we'll expand our high-quality used car vehicle sourcing. On the other hand, we will focus on expanding our overseas customer base. And also at the same time, we will continue to optimize our used car export service platform and improve the overall operation efficiency with the goal to build a one-stop new channel for the used car exports..

The next question comes from the line of Zhang Xiaodan of CICC.

[Interpreted] First of all, the company has recently taken proactive steps on shareholder returns. How do you view the sustainability of the shareholder return program going forward? And over the medium to the long term, how will you balance the cash reserves as well as the shareholder returns? And secondly, regarding the new retail business, what is the company's current strategic positioning for this segment?

[Interpreted] Thank you for your question. Autohome has always placed a strong emphasis on the shareholder return and the long-term market value management. To further enhance our shareholder return mechanism and improve investment value we have established a dual track return framework, combining a regular cash dividend policy with share repurchases, making our shareholder return policy more transparent and predictable.

For the share repurchase, as we just mentioned, the USD 200 million share buyback program, we completed ahead of schedule at the end of July. And also on July 28, we -- the company announced a new USD 400 million share repurchase program. And as of last week, approximately 10% of this buyback program has been completed. So going forward, in the future, we will continue to actively execute this buyback program in the open market in accordance with our established strategy.

For the cash dividend in March, the company announced the RMB 500 million cash dividend for the first half of this year, and this was successfully distributed to all our shareholders by the end of July. And also this year, we will continue to to execute our commitment to pay at least RMB 1.5 billion in cash dividends for the full year. For our long-term capabilities, Autohome has a healthy balance sheet, and we have ample cash reserves and a stable business operations, so this gives us capacity to deliver sustainable -- stable and long-term returns to all shareholders. So in the future, we will continue to improve operational efficiency and strengthen the relevance of our business, ensuring we can fulfill our commitment to all the shareholders.

For the new retail business, it is an important strategic initiative for Autohome as we build our transaction ecosystem and address gaps in our offline service capabilities. For online, we are leveraging the Autohome APP to build an automotive transaction service platform also hold more. For off-line, we leverage offline car purchase and Autohome Good Car to expand off-line service network, connecting online demand with off-line service fulfillment.

So on the online to offline scenarios, we are leveraging our AI technologies to provide end-to-end support, including the vehicle selection through our AI car selection system and purchase support through AI price inquiry, et cetera. So going forward, we are planning to expand AI-able services into the vehicle ownership stage.

In terms of our new retail business update and progress as you can see that the implementation has been moving at a relatively rapid speed. For online car purchase it began its pilot program in late April, and now it's expanded to five cities, Xi'an, Shenzhen, Suzhou, Jinan and Shandong, primarily targeting at high-tier cities. For Autohome Good Car, it opened up a franchise program in late June and has now more than 100 franchise stores with a primary focus on low-tier markets. So ultimately, our goal is to become a comprehensive automotive service ecosystem that deliver value throughout the entire auto life cycle from car discovering to car selection to purchasing, owning and eventually replacing.

Our next question comes from Ritchie Sun of HSBC.

[Interpreted] I want to ask management about how do you feel the recovery timing as well as the drivers behind the auto market and especially for the media services, how would you view the trend in the second half of this year?

[Interpreted] Regarding the drivers for the auto industry recovery, as we just mentioned, the auto market sales for the whole year expected to decline about 16% year-over-year. This has been a downside. However, it doesn't mean there is not any growth opportunities in the market. For example, the vehicles prepaid and replacement will will still contribute more for more new vehicle purchasing demand. And we just mentioned that sales of the high-end NAV price over RMB 400,000, it's increased 46% year-over-year.

So the -- so in our opinion, a sustainable stabilization and recovery of the auto market still depend on improvement in the broader macroeconomic environment and the strengthening of the consumer confidence. And export -- auto export is another important growth opportunity. In the first half of this year, the passenger vehicle, PV, exports increased by more than 70% year-over-year. And the EV exports surging 124%. And for EVs, it accounted for over 50% of the total passenger vehicle exports. So it represents new opportunities in the auto market.

For the -- regarding the media business in the second half of this year, as you know, there is always saying that Golden September and Silver October. And besides, there will be a multiple of new car new vehicle and a new car launching in the market. So in our opinion, we believe the market will show kind of a recovery in second half of this year.

Next question comes from the line of Brian Gong of Citi.

[Interpreted] Given the pressure over auto dealers, how does management think about outlook for our sales lease business?

[Interpreted] For the lease, the lease generation performance is highly related with the overall sales volume in the market. In Q2, the market and the sales of the autos decreased. So that is the main reason for the lease generation segment. So on 1 hand, for dealer continue to face significant operating pressures in the market as many of them failed to meet their sales targets for the first half this year.

And according to the statistics data from the China automobile dealer association, CAPA, 77% of the dealerships achieved less than 90% of their half -- first half year sales target. And so many of those dealers, they respond with more losses and with high volumes of inventory. So that's why we believe -- as we just mentioned, the sales volumes for the new cars still face pressure and a decrease for second half of this year.

So we still see some opportunities in the market. On one hand, we are increasing our traffic and upgrading our products to improve the quality and the content quality of the leads and lay solid foundation for the renewal of our dealership product, for example, the [ Trishan ] fleet for the second half of this year and the next year as well.

I'll give you some examples. For example, we take -- we're using our AI technology. We use the AI live streaming. We are leveraging the AI technology to empower dealers new media live streaming operations, so we can help them to reduce costs and improve their efficiency, and increase their operational efficiency and help them to enhance their conversion capabilities. And also, we have smart stores, so we can upgrade the intelligent driving tour function.

So when users browse a dealer's online store AI-generated voice commentary can match the content on the screen, and it can be played automatically. So it can help to create an immersive watch and listen experience, helping to increase the number of users who will submit and leave their contact information. So respect through those products and service upgrades and technologies, we can help -- we can build a solid foundation for the renewal of our products next year.

No further questions at this time. I will turn the call back over to management for closing remarks.

[Interpreted] Thank you very much, everyone, for joining us today. We look forward to speaking with you all again on our next quarter's conference call and to sharing the latest updates on the company's corporate strategy and business development. Should you have any further questions or suggestions, please feel free to contact us at any time. Thank you, everyone. Goodbye. Thank you, operator.

That does conclude today's conference call. Thank you for your participation. You may now disconnect.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Ladies and gentlemen, thank you for standing by for Autohome's First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. If you have any objections, please disconnect at this time. A live and archived webcast of today's call will be available on Autohome's IR website.

It is now my pleasure to introduce your host, Sterling Song, Autohome's IR director. Mr. Song, please go ahead.

Thank you, operator. Hello, everyone, and welcome to Autohome's first quarter 2026 earnings conference call.

Earlier today, Autohome distributed its earnings release, which can be found on the company's IR website at ir.autohome.com.cn. Joining me on today's call is our Chief Financial Officer, Mr. Craig Yan Zeng. The management will go through the prepared remarks first, which will be followed by a Q&A session where they will be available to answer your questions.

Before we begin, please note that, today's discussion contains forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange.

Autohome undertakes no obligation to update any forward-looking statements, except as required under applicable laws. Please also know that, Autohome's earnings press release and today's conference call include discussions of certain audited non-GAAP financial measures. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures can be found in our earnings release.

I will now turn the call over to Autohome's Chief Financial Officer, Mr. Craig Yan Zeng, for opening remarks. Craig, please go ahead.

[Interpreted] Thank you, Sterling. Hello, everyone. This is Craig Zeng. Thank you for joining our earnings conference call today.

We began the year by rolling out a series of initiatives to accelerate the transformation of our platform from an automotive information media into a comprehensive automotive service ecosystem.

On the user front, we've initiated a major brand refresh and APP upgrade, shifting our focus towards users' interests and the end-to-end car purchase journey to more precisely address consumers' demands.

By strengthening the developments of premium content and expanding our new media matrix, we continue to grow our user base steadily, with average mobile daily active users surpassing 80 million, a new all-time high.

With regards to our transaction platform development, our new retail business launched an online car purchase feature and began piloting collaborative initiatives with multiple dealers to explore new automotive e-commerce experiences.

We also continue to advance our global expansion, YesAuto, our overseas platform, also went live. Together, officially launched operations in Thailand, and our global cross-border used car export platform also went live.

Together, these advancements mark the beginning of a new development phase for Autohome, characterized by a dual-circulation model spanning both domestic and international markets.

As our front-end business continues to expand, we are strengthening our core platform capabilities in parallel. AI and large language models are increasingly becoming a foundational pillar of our infrastructure.

On the external services front, we provide our partners with an AI-powered intelligent product mix. On the internal operations front, we've already integrated large language model capabilities into the company's workflow. As a result, AI-driven platform operations are rapidly advancing from isolated efficiency gains to end-to-end systematic transformation.

Specifically, in March of this year, our overseas content platform YesAuto officially launched operations in Thailand, expanding our professional strength into international markets. With a focus on localized operations, the platform has onboarded local creators, and established a professional content system. To-date, it covers 100 Chinese new energy vehicle model series and includes more than 10,000 product specifications, laying the groundwork for a China NEV database in Thailand.

In addition, leveraging the momentum of the Bangkok International Motor Show, we partnered with 6 Chinese automotive brands and 12 media outlets to execute integrated communication campaigns and build a diverse topic matrix.

This campaign generated over 140 million views and over 530,000 user interactions across platforms, giving us a strong start in our first overseas market and creating new opportunities to support the long-term diversified development of our business.

In terms of MCN development, in the first quarter, Autohome Media MCN ecosystem improved in both quantity and quality. The number of premium creators across various fields exceeded 650, and cumulative reach across new media platforms approached 150 million users. The share of top-tier and middle-tier influencers increased significantly, and further enhancing the overall health of the ecosystem.

Through various approaches including holiday-themed marketing campaigns, creator incentives, deep engagement at offline exhibitions, professional driver incubation, and the development of an overseas influencer ecosystem, et cetera, we are comprehensively building our differentiated content competitiveness.

According to QuestMobile, Autohome's average mobile DAUs reached 80.73 million in March, representing a year-over-year increase of4.9%.

In the new energy vehicle sector, we continue to focus on Autohome Mall as we build a new transaction ecosystem for the automotive industry.

In late April, we launched the online car purchase feature in 2 cities, Shenzhen and Xi'an. Local partner dealerships posted competitive local pricing on the Mall, enabling users to complete the entire car purchasing process in one go, including online vehicle selection, configuration, and deposit payments. Users can then sign the contract offline and pay the remaining balance before taking delivery.

To streamline the car purchasing process and address user concerns, we introduced 4 key guarantees that is officially certified vehicle sources, end-to-end supervision funds, transparent pricing and worry-free refundable deposit policy from sourcing compliance to fund security and from transparent pricing to flexible purchasing options. The platform prioritizes user right at every stage, delivering a secure and trustworthy car purchasing experience.

In the area of AI and large language models, we are leveraging AI and large language models to reshape the entire workflow of our platform's content center, from tracking trending hot topics across the internet to content distribution. Through an AI-powered smart radar, we continuously monitor online trends around the clock.

Combined with large language model assisted content packaging and AIGC enabled automated content generation, we've effectively integrated professional automotive topics with broader public hot topics, establishing a highly efficient rapid response mechanism.

As a result, we have improved content relevance while significantly enhancing operational efficiency. In addition, we have applied both the reverse funnel model and the intelligent distribution model to our membership business. The reverse funnel model works by reasoning backwards from transactions to derive accurate user profiles and extract the key characteristics of these users, improving alignment between platform content and the high conversion user needs.

The intelligent distribution model breaks through the limitations of isolated platform data by integrating multidimensional inputs such as omnichannel user behavior, scenario preferences, and transaction attribution data. This enables smarter, more precise traffic matching as well as more effective user targeting and reach.

In the used car business, during the first quarter, we launched 2 core business platforms, a full process used car selling service platform and a cross-border used car export service platform.

Together, they form a dual-engine model of improving quality and efficiency in domestic services while expanding into global markets. These platforms provide individual car owners, domestic dealers, and overseas buyers with one-stop integrated solutions, helping the industry move into a new stage of high-quality development defined by efficiency, transparency, and security.

Our full process used car selling service platform offers free official inspections, dedicated full-stack services, and a nationwide price inquiry capabilities. Through deep integration of our underlying digital systems, we've established a standardized service system that covers the entire lifecycle of a car owner's selling journey. The platform is currently in pilot operation in 2 cities, and we plan to accelerate the rollout to more cities nationwide.

Our cross-border used car export service platform represents our initial effort towards capturing growth opportunities in overseas markets. It enables dealers to list vehicles on both domestic and international platforms, with a single click. Each exported vehicle includes a detailed inspection report and a complete maintenance and insurance record. These standardized services help address overseas buyers' concerns and reduce the trust gap associated with cross-border transactions.

Going forward, we will introduce more vehicle sourcing partners to further enrich the supply of export qualified vehicles. We also plan to build an end-to-end closed-loop system that integrates domestic vehicle sourcing and aggregation, cross-border transaction matching, and overseas delivery fulfillment, enabling used car dealers to execute compliant cross-border exports with no barriers.

Overall, since the beginning of 2026, we've been actively advancing new initiatives and strategic deployments across multiple business areas, including our content ecosystem, new retail, and the used car businesses.

While driving business development, we've maintained a healthy balance sheet and continue to deliver on our commitment to providing stable shareholder returns.

Today, our Board of Directors approved a cash dividend plan for the first half of 2026, and we have been actively executing share repurchases in the open market.

Looking ahead, we will remain focused on emerging growth areas while maintaining stringent cost controls to ensure long-term value for our shareholders.

With that, let me briefly walk you through the key financials for the first quarter of 2026. Please note that, I will reference RMB only in my discussion today unless otherwise stated.

Net revenues for the first quarter were RMB 1.05 billion. To break it down further, media services revenues were RMB 163 million, lead generation services revenues were RMB 503 million, and online marketplace and others revenues were RMB 382 million.

With respect to cost of revenues in the first quarter was RMB 257 million compared with RMB 316 million in the first quarter of 2025. Gross margin in the first quarter was 75.5% compared with 78.3% in the same period last year.

Turning to operating expenses, sales and marketing expenses in the first quarter were RMB 506 million compared with RMB 544 million in the first quarter of 2025.

Product and development expenses were RMB 274 million, flat year-over-year. General and administrative expenses were RMB 120 million compared with RMB 131 million in the same period last year.

Non-GAAP basic and diluted earnings per share in the first quarter were both RMB 0.39 compared with RMB 0.88 in the corresponding period of 2025. The non-GAAP basic and diluted earnings per ADS in the first quarter were RMB 1.55 and RMB 1.54 respectively, compared with RMB 3.54 and RMB 3.52 respectively, in the corresponding period of 2025.

As of March 31, 2026, our balance sheet remains robust. Cash, cash equivalents, short-term investments and other long-term investments totaled RMB 20.04 billion. Net cash used in operating activities was RMB 143 million in the first quarter of 2026.

On March 5, 2026, our Board of Directors authorized a share repurchase program under which we are committed to repurchase up to USD 200 million of Autohome's ADS over period not exceeding 18 months. As of May 22, 2026, we repurchased approximately 3.47 million ADS for a total cost of approximately USD 62.3 million.

In addition, in accordance with our dividend policy, our Board of Directors approved [ Audio Gap ] per ADS or USD 0.65 for ordinary share payable in U.S. dollars to holders of ADS and ordinary shares of record as of the close of business on July 2, 2026.

The aggregate amount of the dividends will be approximately RMB 0.5 billion and expected to be paid to holders of the company's ordinary shares and ADS on or around July 24, 2026 and July 31, 2026 respectively.

So that concludes our financial summary. Now we are ready to open up the Q&A session. Operator, please open the line for the Q&A session. Thank you.

[Operator Instructions] And our first question comes from the line of Thomas Chong of Jefferies.

[Foreign Language] My first question is about the industry trend. We have seen auto industry is a bit soft in Q1. Can management provide more color about your thoughts about the auto industry outlook? And my second question is about Autohome and Haier. Can management comment about the updates regarding the synergies?

[Interpreted] Thank you for your question. As you mentioned, in China, the auto market weakened in the first quarter this year. Retail sales of passenger vehicles declined 17% year-over-year, while NEV sales declined 21% year-over-year. It is the first quarter in history where NEV sales recorded a year-over-year decline in the past, the first time.

And in April this year, retail sales for both passenger vehicles and NEVs both continued to fall further, declining 22% and 7% respectively compared to the same period in 2025. So this is the result of multiple pressures converging from government policy, industry conditions, as well as consumer demand.

The faster government policy adjustment and the pulling forward of consumer demand, it's a core reason -- main reason behind the sales decline. As you know, the policy exempting the new energy vehicle from purchase tax expired at the end of December last year. So this policy expiration really caused consumers to bring forward their car purchases.

So we saw NEV retail sales reach nearly 1.34 million units in December last year alone. So this is a record high in history. This also directly puts forward part of the demand that would otherwise have appeared in the first quarter this year.

So since the beginning of 2026, as you know, the government subsidies have been scaled back. The policy-driven boost to demands weakened. At the same time, the overall consumer confidence still remains relatively cautious in Q1. So this further dampens consumers' willingness to purchase vehicles.

In addition, the auto market in the first quarter last year was a period of cyclical recovery, so it creates a relatively high base for comparison. The combination of a tougher year-over-year comparison last year, and softer demand this year underscores the market pressures seen in the first quarter. So it formed the primary backdrop for the short-term decline in auto sales.

So from an industry perspective, we can see the overcapacity in the auto sector further exacerbated the market pressure and reinforced consumers' wait and see attitude. So on one hand, dealer inventory still remain at high level. Since the beginning of this year, the Dealer Inventory Warning Index has stayed above the caution threshold for several months already. So it increased the pressure on dealers' cash flows. The dealers' losses spread further.

So in order to recover capital, the dealers have increased their discounts. So this drives the prices lower. So in this way, it has strengthened our consumers' expectations that the auto prices will continue to fall down. It's further lessening the purchasing decision cycle and slowing the transaction conversion.

So on the other hand, operating pressures on major OEMs also continue to spread. Among the top 10 OEMs in the first quarter this year, 9 of them reported year-over-year sales declines. We also observed that the profit margin for the China auto manufacturing industry fell to just 3.2% for 3 months this year. This is a record low in history, and it is further declining from 4.1% compared with last year.

So this really reflects the widespread reality facing the whole industry. The OEMs are relying on pricing cuts to drive sales volumes, while both prices and volumes are simultaneously under great pressure.

Another point is that, in the future export, exports -- auto exports will serve as a key stabilizing force for the auto industry. According to the data from CPCA, China Passenger Car Association, China exported a cumulative 1.83 million vehicles in the first quarter this year, which is a year-over-year growth of 61%. So AEV exports continue to account for a large percentage, still significantly a high share. So it remains as the core growth driver in overseas expansion.

About the synergies and collaboration with Haier Group, the transaction has completed more than 6 months. So the current collaboration is still focused on synergies execution in the used car business and offline services scenario, et cetera.

For CARtech, its used car business has been developing for so many years with a presence across multiple cities nationwide in China, and it has extensive experience in integrated online to offline operations and dealership store management, et cetera.

So Haier Group, it also brings us expertise in consumer service systems and management models, which are all areas for collaboration and knowledge sharing for us.

For example, our new retail business has already begun cooperation with CARtech in the used car segment, including the vehicle sourcing and vehicle inspection processes. CARtech's vehicle customization and the charging port -- charging station business have also created synergistic opportunities with that. So going forward in the future, we plan to continue deepening and expanding cooperation in the above areas. Thank you.

We will now take our next question from Brian Gong of Citi.

[Interpreted] I have 2 questions. First is that, can management share the feedback from dealers during the contract renewal period this year? Should we expect continuous decline on sales lead business given dealers worsening conditions?

And secondly, for new retail business, what is our strategies for expansion now? Does this business approaches the phase that we can scale up very quickly? And how should we view its growth potential ahead?

[Interpreted] Thank you for your question. At present, for the dealer membership renewal, this has been completed this year. And overall, the dealer customer coverage still remains at a stable level. Even though there is ongoing price wars in the auto market and there are shrinking margins at the retail level. So it's really bring a lot of high inventory pressure for most of the dealers. So for most of the dealers, they adopted a more conservative operating approach, and the loss-making coverage in the dealer segment has widened, and the profitability pressure still remains at a high level in the retail end for the dealers.

Despite there is a pressure on the overall vehicle sales, for dealers, their demand for high-quality sales leads still continue to increase. Autohome still remains one of the most important customer acquisition channels for dealer customers. So on the membership services side, we are improving the traffic, matching accuracy and distribution efficiency through the data-driven reverse funnel model and the intelligent distribution model.

So going forward, Autohome will continue to work closely, with the dealer customers to further explore solutions which can help them to break through the current operation challenges for the dealer customers. We aim to support dealerships in increasing the customer traffic and improving the conversion rate, while also trying to expand the integrated O2O business initiative. Our goal is to help dealer customers improve their revenues and profitability, while mitigating as much as possible the operational impact caused by the broader auto industry downturn.

For our new retail business, we are still currently exploring to reach allowing local dealer customers to join our network, which is the Autohome Mall platform, and display dealer vehicle inventory and the final transaction pricing online. So this model is just quite similar to Taobao marketplace model.

So through cooperation with such dealers, we are able to provide users with a seamless O2O online-to-offline one-stop vehicle purchasing experience, which can cover the entire process from the online vehicle selection, browsing, personalized configuration, to online deposit payment, and convenient offline vehicle delivery and pickup. And our target is to create an e-commerce, like auto transaction platform, which can deliver an efficient, user-friendly experience for our customers.

At present, we are piloting this model, online car purchasing model in 2 cities, Xi'an and Shenzhen, so far so good. And once this model has been fully upgraded and validated, we will further expand it into other additional cities. Thank you.

We will now take our next question from the line of Jing Yuan from CICC.

[Foreign Language] I wonder, what's the company's future plan for shareholder returns going forward?

[Interpreted] Thank you for your question. As we said, we will continue to implement our commitment for shareholder returns. Today, our Board of Directors announced the interim cash dividend plan of RMB 500 million for the first half of this year, and we will continue to fulfill our commitment for the full year cash dividend of no less than RMB 1.5 billion.

So regardless of the fluctuations in the auto industry, we will consistently place strong emphasis on the shareholder returns, and we will maintain continuity and stability in our dividend policy.

For the share buyback, our new share buyback program was ratified in March by the Board. So until today, it's almost 3 months. So far, we have completed roughly 1/3 of the authorized share repurchase amount. And so it really reflects our determined attitude and execution.

We have -- for Autohome, we have been consistently prioritized shareholder returns and we established our shareholder return framework, including the cash dividend plus the share buyback. So going forward, we will continue to adhere to our comprehensive shareholder return policy in the future.

We will now take our next question from the line of Ritchie Sun of HSBC.

[Foreign language] I want to ask about the Autohome Mall business progress. Any metrics to share and the second half outlook?

[Interpreted] Thank you for your question. For detailed numbers, it is still too early at the moment. For our Autohome Shopping Mall, our target is try to provide our users with more standardized new cars, certified used car products and multiple platform level safeguards.

For example, for the new standard vehicles, we aggregate the bestselling models from major brands and offer exclusive benefits as well as other transparent final pricing. And so it can address key user pain points such as the difficulty in the price comparison and customer concerns about overpaying. And for the high-quality used cars, we can rely on our deep cooperation with CARtech to establish a unified inspection and warranty system.

So for the online auto industry, the overall business model is still not very clear, but we firmly trust that this is the right direction for the whole industry. So from our point of view, we do expect that both the new car and the used car transaction business will become a new engine for Autohome's future growth. So this is our deep understanding for the future of the industry. Thank you.

Thank you. There are no further questions at this time. I'll turn the call back to management for closing remarks.

[Interpreted] Thank you everyone. Thank you very much for joining the call today. We appreciate your continued support and we look forward to updating you on our next quarter's conference call in a few months' time. And in the meantime, please feel free to contact us if you have any further questions or comments. Thank you very much. Goodbye. Thank you.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Ladies and gentlemen, thank you for standing by for Autohome's Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. If you have any objections, you may disconnect at this time. A live and archived webcast of this earnings conference call will be available on Autohome's IR website.

It is now my pleasure to introduce your host, Sterling Song, Autohome's IR Doctor. Mr. Song, please go ahead.

Thank you, operator. Hello, everyone, and welcome to Autohome's Fourth Quarter and Full Year 2025 Earnings Conference Call. Earlier today, Autohome distributed its earnings release, which can be found on the company's IR website at ir.autohome.com.cn. Joining me on today's call is our Chief Financial Officer, Mr. Craig Yan Zeng. Management will go through the prepared remarks first, which will be followed by a Q&A session where they will be available to answer your questions.

Before we continue, please note that the discussion today will contain forward-looking statements made under the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to those outlined in our public filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange. Autohome doesn't undertake any obligation to update any forward-looking statements, except as required under applicable laws. Please also note that Autohome's earnings press release and this conference call include discussions of certain unaudited non-GAAP financial measures. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures can be found in our earnings release.

I will now turn the call over to Autohome's Chief Financial Officer, Mr. Craig Yan Zeng for opening remarks. Craig, please go ahead.

[Interpreted] Thank you, Sterling. Hello, everyone, and this is Craig Zeng. Thank you for joining our earnings conference call today.

2025 was a pivotal year in our evaluation transforming from an automotive information platform to automotive service ecosystem. Facing a dynamic industry landscape, our focus was on driving 2 core initiatives. On the content front, we continue to strengthen the development of high-quality content while enhancing our creator ecosystem and expanding new media distribution capabilities. On the service front, we accelerated the development of fully integrated online to off-line services to create a more efficient and convenient end-to-end automotive service ecosystem for users and industry partners. Throughout this transformation, we'll be -- AI as a core engine to drive product innovation and optimize operations and have already achieved substantial progress across multiple business areas.

On the user side, by continuously optimizing and iterating our platform tools, we've effectively reduced decision-making costs and significantly enhance the overall user experience, taking new energy vehicles as a sample. We've launched features such as optional configuration, selections and vehicle comparison leads further enriching the car selection to set to help users make faster purchasing decisions. Moreover, by building a traffic alliance and expanding service categories, Autohome now covers a broader range of user scenarios, enabling us to better meet diverse user need.

Our auto integration initiatives are key to reshaping the automotive consumption process. Throughout 2025, we organized our 5,000 offline automotive exhibition and group purchase events nationwide and collaborated across industries with user-oriented culture IP such as e-sports and music festivals. These efforts went beyond the traditional car purchasing model by reaching a broader consumer base and ultimately integrating car reading reduction, test driving and repurchasing and purchasing into an immersive -- within the development of our transaction service ecosystem. We launched the Autohome Mall in the second half last year, providing users with a smoother digital car purchasing experience. Currently, this business though still in initial phase has achieved stable operations and is demonstrating positive momentum which make us even more confident in the growth prospects of our transaction segment in the coming year.

Behind every product and service upgrade introduction and real-world deployment is a strong foundation powered by data and AI technology. In 2025, we introduced our proprietary [ Tanji ] large language model and [ Tanji ] intelligent service platform integrating Autohome's 2 decades of industry data and service experience with cutting-edge algorithms. This integration helps our ecosystem partners accelerate their smart transformation Meanwhile, Autohome's true product portfolio has been comprehensively upgraded with AI-powered capabilities from AI smart systems that support users throughout the entire car selection and the purchase process to AI GC technology that generally resonate and distribute marketing content across platforms and further to AI-driven intelligent advertising placement covering the entire advertising chain and more. So we are advancing Autohome's shift from a traffic gateway into an intelligence engine that improves efficiency across the entire ecosystem.

Specifically, over the past year, we continue to make progress in our content ecosystem, strengthening our professional influence and expanding our reach across new media channels. For instance, during the Guangzhou Auto Show last November, we integrated our event coverage with the create conference centered on the theme of utility-driven coverage. We produced marathon live stream spanning 2 days and 23 hours. Content was closely provided user scenario with the resorts were distributed simultaneously across 6 major new media platforms, achieving a multi-dimensional scenario-based content broadcast.

In addition, in the fourth quarter, we launched Autohome [indiscernible], a comprehensive one-stop content marketing platform for the automotive industry by building a creator metrics centered on 5 key pillars industry experts, technology, racing, outdoor lifestyle and global markets. We provide automakers with a one-stop automotive content service covering articles, videos, live stream and more. This allows us to meet the diverse scenario marketing needs of automakers. As of the end of 2025, the platform has attracted our 2,500 premier creators from Autohome and various new media channels.

At the same time, we achieved significant results in building our [ AMS ] system. Autohome media now covers over 500 high-quality KOLs and POCs across diverse fields, and our new media platforms have cumulatively reached over 100 million users. According to QuestMobile, Autohome's average mobile DAUs in December 2025 were 77.51 million, remaining stable year-over-year.

In the new energy vehicle sector following a successful pilot in late September 2025 Autohome Mall was officially launched in the fourth quarter, continuously advancing our transaction service upgrade. On one seat resources across the industry chain to expand vehicle offerings and optimize the car purchasing experience for users. Off-line, we are focused on low-tier cities by establishing our franchise network, feeding gaps in OEM channel coverage. Autohome more one-stop on the service ecosystem is still in the exploratory and refinement as we had already secured partners with 23 mainstream automotive brands. Looking ahead, we will continue to refine the automotive transaction ecosystem and work with partners across the entire industry value chain to advance the automotive industry's digital and online transformation. For the full year 2025, Autohome's NEV related revenues, including the new retail business maintained steady growth, increasing by 30.2% year-over-year.

On digitalization, we completed a series of AI-driven upgrades to our products. Early in the year, Autohome launched an AI-powered intelligence assistant built on Deep Seek and Autohome's proprietary data significantly enhancing the Q&A experience in the automotive vertical. In April, we introduced an intelligent used car purchasing assistance that addresses pain points in transaction matching and the purchase decision-making for nonstandard used cars. As a result, we now have achieved full AI assistance coverage across both new car and used car user scenarios, maintaining industry-leading quality response rates for user Q&A. For partners, we used our unique data resources and industry analytics models to upgrade our digital product line across the entire value chain from marketing outreach to potential customer acquisition to sales conversion and to after-sale services. This has enabled end-to-end efficiency improvements across the process for our clients. To date, we have served our 50 automotive brands.

In our used car business, we continue to advance the development of a standardized service system. For vehicle pricing, our AI vehicle inspector has been successfully deployed across multiple third-party platforms. It allows users to obtain via [ relation ] services through various inputs including license plate images and vehicle registration while also providing in-depth and analysis of marketing pricing trends is pricing accuracy and user adoption rates, both rank among the highest in the industry on the vehicle supply side we partnered with 9 authoritative inspection agencies to establish the vehicle certification alliance. Over the year, we completed standardized inspections for more than 500,000 vehicles offering professional and reliable quality assurance for transactions on our platform and effectively reducing trust-related costs during the transaction process.

Overall, in 2025, we remain committed to a user-centric approach, continuously improving the user experience, to reach diverse and high-quality content as well as intelligent tools. We also achieved key breakthroughs in the practical application of AI and in building an integrated online to offline transaction ecosystem. Moving forward, we remain committed to improving the user experience, continuously enhancing our service and transaction ecosystem and driving the high quality and sustainable development of Autohome.

With that, let me briefly walk you through the key financials for the fourth quarter and the full year of 2025. Please note that I will reference only in my discussion today, unless otherwise stated.

Net revenues for the fourth quarter were RMB 1.46 billion. To break it down further, media services revenues were RMB 334 million, lease generation services revenue were RMB 68 million, and the online marketplace and others revenues contributed RMB 460.3 million annually.

Cost of revenues in the fourth quarter was RMB 319 million compared to RMB 428 million in the fourth quarter of 2024. Gross margin in the fourth quarter was 78.2%, compared to 76% in the same period of 2024.

Turning to operating expenses. Sales and marketing expenses in the fourth quarter were RMB 739 million compared to RMB 780 million in the fourth quarter of 2024. Product and development expenses were RMB 258 million compared to RMB 328 million in the same period of 2024. General and administrative expenses were RMB 115 million compared to RMB 131 million during the same period of 2024.

Overall, we delivered an operating profit of RMB 92 million in the fourth quarter compared to RMB 232 million for the same period of 2024. Adjusted net income attributable to Autohome was RMB 304 million in the fourth quarter compared to RMB 487 million in the corresponding period of 2024.

Non-GAAP basic and diluted earnings per share in the fourth quarter were both 0.65 compared to 1 for both in the corresponding period of 2024. Non-GAAP basic and diluted earnings per ADS in the fourth quarter were 2.60 and 2.59 respectively, compared to the 4.02 and 3.99, respectively, in the corresponding period of [ 1994 ].

Next, I will briefly summarize our full year 2025 results. Total revenues were RMB 6.45 billion, of which media services revenues were RMB 1.15 billion, lease generation services revenues were RMB 2.71 billion, and the online marketplace and other revenues were RMB 2.59 billion, representing an increase of 8.8% year-over-year. In addition, we delivered an adjusted net income attributable to Autohome of RMB 1.61 billion with an adjusted net margin of 24.9%.

As of December 31, 2025, our balance sheet remains robust. Cash, cash equivalents, short-term investments and long-term financial products totaled RMB 21.36 billion. We generated net operating cash flow of RMB 0.89 billion in 2025.

On September 1, 2024, our Board of Directors authorized a share repurchase program under which we are permitted to repurchase up to USD 200 million of Autohome's ADS for a period not exceed 12 months thereafter. On August 14, 2025, the Board approved an extension of the program through December 31, 2025. Under this program, we have repurchased approximately 7.12 million ADS for a total cost of approximately USD 185 million.

I'm also pleased to announce that on March 3, 2026, our Board of Directors authorized a new share repurchase program under which we may repurchase up to USD 200 million of Autohome ADS over the next 18 months. This reflects our strong confidence in our business, prospects and long-term development as well as our consistent commitment to continuously creating and delivering value to our shareholders.

So that concludes our financial summary. We are now ready to open up the Q&A session. Operator, please open the line for the Q&A.

[Operator Instructions] Our first question comes from the line of Thomas Chong of Jefferies.

[Interpreted] My first question is about can management provide more color about your -- about the auto industry outlook? My second question is about capital return. We know there are updates on buyback. How should we think about the dividend?

[Interpreted] First, let me share with you some recent market developments and future trends. First, we believe the total vehicle sales in 2026 is expected to increase slightly or modestly with the overall industry profitability still remain under pressure. On the policy side, the purchase tax incentives for [ ABBs ] are gradually being phased out. And at the same time, the new subsidy policy has shifted from a fixed subsidy to a variable subsidy. On the market side, both the China Passenger Car Authorization, that is CPCA and China Association of Automobile Manufacturers, CAAM, both of them projected that this year, China's total auto sales will only increase slightly by 1% year-over-year, which is the lowest in the past few years. So we believe the competition in the auto market will shift from the price war to value war.

Yes. And meanwhile, the overall auto sector profitability still remains under pressure. And the profit margin last year is for the auto sector is only 4.1%, down from 4.3% compared with the previous year. And so the overall sector is entered into a year of very low tariff. So our next step, we believe the technological innovation and intelligentization should be the key theme for the competition for auto sector in the next stage. So for ourselves, for Autohome, we believe this represents a rare opportunity to leverage our integrated O2O business model to connect the entire vehicle purchasing life cycle for users. At the same time, we can also help OEMs to acquire more incremental customers and drive additional sales. So helping them to capture greater market share in an increasingly competitive a more mature market environment.

Just now we announced the Board of Directors authorized a new share repurchase program. And also on the cash dividend, we firmly remain committed to distributing no less than [ 5 billion ] in total in the cash dividend for the full year. And so we can ensure consistent, reliable cash dividend to our shareholders. So over the long run, we have committed to building a comprehensive shareholder return framework centered on sustained dividend plus share repurchase striving to deliver predictable and sustainable returns to our shareholders. So in the future, we'll continue to uphold the long-term, stable and proactive shareholder return policy. We sincerely appreciate all our shareholders for their long-term strong and continued support to the company.

Our next question comes from Jin Yuan from CICC.

[Interpreted] [ After hire ] became the major shareholder, how has the company's business line being updated? And what's the potential for future collaboration? And my second question is, what have your expansion plan for offline stores then?

[Interpreted] Thank you. After hire becoming our new controlling shareholder, we don't have a material change in our overall strategic direction. First, we are strengthening the development of user first, and we are more focused on the user experience as the top priorities. Second, as we just mentioned we view transform from information platform to a transaction platform. So we set up the Autohome Mall, which was established last year. With the continuous upgrade of AI capabilities, which will bring us more -- help us more in our future operations. So in the long run, our target is Phase II, we will transform from an information platform into a one-stop transaction ecosystem platform. .

And in terms of synergies, which is higher, we will leverage higher strength in channels, supply chain management and service networks to further optimize our integrated O2O new retail model. We will explore a low-cost, high efficiency and experience-driven channel sales approach to drive our business upgrade from a transaction matchmaking model to a full chain service model. And ultimately, our goal is to provide more convenient, more transparent and trustworthy car purchasing experience covering the interior from the vehicle searching, selecting to purchasing, using and replacing. For the offline stores, we will continue to expand our primary franchise model. So our focus should be covering more cities from Tier 3 to Tier 5 low-tier cities to help OEMs to strengthen their channel networks. Find them -- try to help them to find more incremental users and addressing the OEM's pain points, for example, insufficient channel coverage in lot of markets, et cetera.

Our next question comes from the line of Ritchie Sun from HSBC.

[Interpreted] Firstly, regarding the NEV business. Can you share what will we bring to the partners? And in 2026, what are the key indicators we should look for to assess the development progress?

Secondly, in terms of the rapid development for AI agents, we are seeing there's some impact to some industry and platforms. how does management assess the impact of AI agent towards auto verticals? And what would Autohome do to address this risk? And what are the progress made in the AI applications. And finally, in terms of the dealer side, the dealers related revenue has been falling. So when do management think this decline will actually stop?

[Interpreted] Thank you for your questions. First, let me answer your question about what value can be in our NEV transaction business bring to our partners. As I just mentioned, the transaction business was launched in the second half of last year. And this year, we'll continue to further explore this business model. So for NEV, what we provide is far beyond the advertising and lead generation businesses. So we are now delivering a complete end-to-end solution that covers from car searching to transaction conversion process. So this approach differentiates Autohome from other platforms in the market. For.

The -- in terms of metrics to monitor for this progress is quite simple. First is the number of brands. How many brands want to cooperate with us, want to try our platform. For offline, the metrics should we focus more on the coverage of the channel works. And besides, in addition, transaction volume is another key metric. We are -- what we are working now to validate this business model and we target to increase the scale of this model gradually. For the -- how to assess the AI agents impact on the auto media vertical. First off from the interaction model level, AI agent becoming -- one more becoming the new hub connecting users and the services with conversational interaction replacing the traditional models. And second is more from the service side, service level. But this is just what we just mentioned, we are transitioning to more the transaction model transaction platform.

So for Autohome, our response has 2 points. First is we try to build an Autohome AI agent for the auto sector, for the auto industry, and we try to enhance the user experience. So what we are doing is we try to enable the agent to deliver a complete one-stop personalized, concierge-style service across the entire auto life cycle. So we are -- what we are doing is we try to make AI a trusted intelligent companion throughout the car purchasing to ownership life cycle. The second point is we try to establish an AI-based intelligent service network, which can connect the automakers, dealers, financial institutions and other stakeholders, et cetera. So to enable the direct service delivery and collaborate ecosystem value creation and we try to balance the 2C experience and the 2B conversion efficiency.

So from the very beginning, our Autohome focus on the AI, and we have made a lot of progress. For example, we developed a proprietary auto vertical large language model, which is called [ Tanji ]. It ranks first in the auto knowledge evaluation among Chinese large models. And for the fee and users, AI pioneered a conversational assistant covering the full life cycle of car searching, selection, purchasing and using. So we can achieve industry-leading performance evaluation and significantly enhance experience of users and in this way, we can shorten the user decision-making cycles. And for the [ BN ] customers, we also leverage AI to make more new content to provide a one-stop AIGC capabilities and intelligent operational services.

And we will focus on the dealers business conditions. Last year, our dealership suffered severe losses. We saw their survival conditions worsened and even if we find new vehicle prices fell below the prices for used cars from our data certificates, it showed over 70% of the dealers nationwide in China were in loss-making. Because of the tough environment, so some dealers have exceeded the dealership network last year, which is the most difficult in the last few years. So based on our own data and statistics at the end of last year, the total number of dealers declined by approximately 5% year-over-year. So under such environment, the decrease in dealer group's budget was anticipated by us already. So this year, our renewal for our dealership member product has been completed. So the coverage still remains at a solid level. And this year, next -- for the next step, we will work with our dealer customers together to try to find solutions and we want to get a win-win situation for both sides.

So as we just mentioned, we will work with dealer clients together, for example, work on more digital products, increase their traffic, increase their conversion rates and other auto business as well try to help them to increase their states to help the dealerships -- the dealer's operations, and we try to decrease any negative impact on their operations.

There are no further questions at this time. I'll turn the call back over to management for closing remarks.

[Interpreted] Thank you, everyone. Thank you very much for joining us today. We appreciate your continued support. I look forward to updating you on our next quarter's conference call in a few months' time. In the meantime, please feel free to contact us if you have any further questions or comments. Thank you. Goodbye.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect your lines.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Ladies and gentlemen, thank you for standing by for Autohome's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. If you have any objections, you may disconnect at this time. A live and archived webcast of this earnings conference call will also be available on Autohome's IR website.

It is now my pleasure to introduce your host, Mr. Sterling Song, Autohome's IR Director. Mr. Song, please go ahead.

Thank you, operator. Hello, everyone, and welcome to Autohome's Third Quarter 2025 Earnings Conference Call. Earlier today, Autohome distributed its earnings release, which can be found on the company's IR website at ir.autohome.com.cn.

Joining me on today's call is our Chief Financial Officer, Mr. Craig Yan Zeng. Management will go through the prepared remarks, which will be followed by a Q&A session, where it is available to answer all your questions.

Before we continue, please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations.

Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange. Autohome doesn't undertake any obligation to update any forward-looking statements, except as required under applicable law.

Please also note that, Autohome's earnings press release and this conference call include discussions of certain unaudited non-GAAP financial measures. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures can be found in our earnings release.

I'll now turn the call over to Autohome's Chief Financial Officer, Mr. Craig Yan Zeng, for opening remarks. Please go ahead, Craig.

[Interpreted] Thank you, Sterling. Hello, everyone. This is Craig Zeng. Thank you for joining our earnings conference call today.

In the third quarter, we continued to advance our AI and O2O strategies. On AI, we significantly strengthened the integration of AI technologies with our products, fostering business innovation while enhancing both user experience and customer operational efficiency. On O2O, we continuously improved our O2O platform by integrating online and offline resources, optimizing the end-to-end user experience and building a comprehensive closed-loop ecosystem that spans the entire customer journey from initial traffic acquisition to transaction completion to after sales services.

In terms of AI technology applications, we completed a comprehensive upgrade of our AI assistant by strengthening model capabilities, integrating user inquiries with specific vehicle models and expanding usage scenarios we achieved precise matching between user queries and car models. This has created a decision-making loop of content drives engagement, engagement lead to action. In addition, we've also introduced 2 new features, the AI car selection system and AI vehicle for diagnostics, providing users with more intuitive and efficient tools for their car-related needs.

In September, we launched the first inaugural Global AI Technology Conference. This established a premium platform for technical exchange among leading enterprises, showcased cutting-edge advances in China's intelligent automotive technologies, and elevated the collective image for Chinese auto brands. The conference's success also serves as a testament to Autohome's professional influence as a trusted media platform.

The conference received authoritative endorsements from 5 major automotive associations and was strongly supported by 14 key corporate partners. 7 top executives from leading companies in the industry delivered impact keynote speeches.

Following the conference, over 30 automotive brands engaged with Autohome's official Weibo account, while more than 60 professional editors, technical experts and PGC creators formed a multidimensional communication matrix that drew widespread attention across the industry.

In building our auto ecosystem, we soft launched our Autohome Mall on September 20, marking a major milestone and significant progress in our one-stop online to offline strategy. This initiative further improves our new retail business model through continuous upgrades and makes our model more complete.

This strategy extends Autohome's role from being a decision-making hub for car selection and research to the final car purchase and ordering per transaction creating a full digitalized closed loop for the entire car purchase experience and significantly increasing the value of our traffic.

Specifically, on content, we strengthened our content matrix by increasing professional depth and expanding the breadth of perspective, while continuously advancing our diversified content ecosystem.

For our 2025 series of coverage on domestic and international auto shows, we adopted a dual-track approach to achieve comprehensive reach from global influence to local penetration. At the Munich Auto Show, we took a global perspective, focusing on world's premiers and the Chinese brands going global.

We built a professional and exclusive content matrix through intensive bilingual live streaming and video production that leveraged global mainstream media networks to amplify China's automotive innovation and brand recognition worldwide.

At the Chengdu Auto Show, we focused on new car launches and purchase guidance, integrating resources from 18 automakers to create Autohome exclusive live streaming sessions. This provided users with an immersive auto show experience. On the first day of the auto show, we achieved 100% coverage of all new car launches.

Beyond our professional auto show coverage, we made significant strides in developing a content-centered interactive ecosystem. The newly established Autohome Media MCN is committed to building a multi-category influencer matrix that centers on automotive vertical, while expanding into technology, travel and overseas content.

We've also developed a rich and diverse content ecosystem that combines professional and engaging PGC content, in-depth and authoritative OTC insights and authentic user-generated experiences that resonate.

To date, we have gathered over 200 high-quality creators across multiple platforms covering professional car reviews, technology, travel and other areas, continuously enhancing Autohome's platform influence. According to QuestMobile, the average mobile DAUs reached 76.56 million in September 2025, up by 5.1% from the same period last year.

In NEVs, we continue to focus on user and client needs while building a comprehensive automotive ecosystem. Online centered around our newly soft launched Autohome Mall introduced in late September, provides transaction services, while our offline network of franchise stores, CARtech outlets and used car dealerships is designated to integrate the entire process from online ordering to offline delivery and service.

Building on the success of trial, we plan to officially launch the Autohome Mall during the Double 11 shopping festival. By integrating resources from across the industry value chain, we are committed to providing users with more precise, professional and efficient car purchasing experiences.

Furthermore, total revenues from NEVs in the third quarter, including those from the new retail business has continued to grow, increasing by 58.6% from last year.

On digitalization, our 5 major digital intelligence product lines are leveraging Autohome's platform capabilities of full life cycle data tracking to continuously help clients improve targeting accuracy and service efficiency.

Furthermore, at the Global AI Technology Conference, we officially launched the Tianshu Intelligence Service Platform powered by Autohome's proprietary Cangjie Large Language Model, the platform uses an open toolkit and service distribution capabilities to redefine collaboration among users, the platform and the ecosystem partners. This advancement drives Autohome's transformation from an automotive information platform to an industry-wide intelligent hub, further strengthening our field advantages in technology and ecosystem.

For our used car business, we continue to advance the standardization of both transactions and services. The AI car inspection expert developed based on historical transaction data and algorithmic models have achieved industry-leading accuracy in vehicle valuation.

Meanwhile, our flagship certified used car stores have further expanded its network of partner dealers. In the future, we will continue to uphold integrity and standardization as our foundation, deepen our collaboration with high-quality used car dealers and continuously strive to provide consumers with a more reliable and worry-free used car buying experience.

In summary, this year, we focused on AI and O2O to comprehensively accelerate our business expansion. Looking ahead, we will continue driving innovation in both products and business models, building a more efficient automotive ecosystem and service system that creates sustained value for the industry and ensures our long-term stable development.

With that, now please let me briefly walk you through the key financials for the third quarter 2025. Please note that, I will reference RMB only in my discussion today, unless otherwise stated.

Net revenues for the third quarter reached RMB 1.78 billion. To break it down further, media services revenues contributed RMB 298 million, leads generation services revenues were RMB 664 million and the online marketplace and others revenues increased by 32.1% year-over-year to RMB 816 million.

With respect to cost, cost of revenues in the third quarter was RMB 646 million compared to RMB 408 million in the third quarter of 2024. Gross margin in the third quarter was 63.7% compared to 77% during the same period last year.

Turning to operating expenses. Sales and marketing expenses in the third quarter were RMB 620 million compared to RMB 877 million in the third quarter of 2024. Product and development expenses were RMB 279 million compared to RMB 339 million in the third quarter of 2024.

General and administrative expenses were RMB 125 million compared to RMB 137 million during the same period last year.

Overall, we delivered an operating profit of RMB 147 million in the third quarter compared to RMB 83 million for the same period of 2024. Adjusted net income attributable to Autohome was RMB 407 million in the third quarter compared to RMB 497 million in the corresponding period of 2024.

Non-GAAP basic and diluted earnings per share in the third quarter was RMB 0.87 and RMB 0.86, respectively, compared to RMB 1.02 for both in the corresponding period of 2024. Non-GAAP basic and diluted earnings per ADS in the third quarter were RMB 3.47 and RMB 3.45 respectively, compared to RMB 4.09 and RMB 4.08, respectively, in the corresponding period of 2024.

As of September 30, 2025, our balance sheet remains robust with cash, cash equivalents and short-term investments of RMB 21.89 billion. We generated net operating cash flow of RMB 67 million in the third quarter.

On September 4, 2024, our Board of Directors authorized a new share repurchase program under which we are permitted to repurchase up to USD 200 million of Autohome's ADS for a period not to exceed 12 months thereafter. On August 14, 2025, the Board approved an extension of the term of this program through December 31, 2025. As of October 31, 2025, we have repurchased approximately 5.48 million ADS for a total cost of approximately USD 146 million.

In addition, in accordance with our dividend policy, our Board of Directors has approved a cash dividend of USD 1.20 per ADS or USD 0.30 per ordinary share payable in U.S. dollars to holders of ADS and ordinary shares of record as of the close of business on December 31, 2025. The aggregate amount of the dividend will be approximately RMB 1 billion and expected to be paid to holders of ordinary shares and ADS of the company on or around February 12, 2026, and February 19, 2026, respectively.

On September 30, 2025, the company announced the approval of a cash dividend of approximately RMB 500 million. Overall, the company has fulfilled its commitment to shareholders to distribute no less than RMB 1.5 billion in dividends for the full year of 2025.

Looking ahead, we remain committed to maintaining a long-term stable and proactive approach to shareholder returns, and we sincerely thank our shareholders for their continued strong support to the company.

So that concludes our financial summary. We are ready to open up Q&A session. Operator?

[Operator Instructions] Our first question comes from the line of Thomas Chong of Jefferies.

[Interpreted] I have 2 questions. The first question is about the outlook for 2026 auto market. How should we think about the industry trend? And my second question is about AI. We mentioned AI in our prepared remarks. So, I just want to get some more color about the progress of our AI product offerings.

[Interpreted] Thank you for your question. First, let me share some market recent developments and the future trends with you.

First of all, the price war in the auto market has shown some signs of easing and the automakers are accelerating their intelligent technology efforts. In recent months, multiple government agencies have rolled out intensive policies calling for the industry to end devolution and provided policy guidance to ease the ongoing price war in the auto sector. So, all these measures have helped to cool down the price war in the auto market. And we have also observed that over 20 automakers have gradually phased out their fixed price promotions.

Since the start of this year, major automakers have successfully announced their plans for intelligent driving technologies, to accelerate the adoption and application of intelligent driving. So, from this, it's quite clear that future industry competition will depend more on the company's comprehensive capabilities in integrating intelligent technology, user scenarios and meeting user needs, et cetera, rather than any single technological advantage. So, for next year, the price competition is expected to shift more towards a battle of technological cost effectiveness.

Secondly, the NEV market still remains the core growth driver, even though this year, their growth number is comparatively a little bit slower than last year. But according to the data from the China Passenger Car Association, CPCA, the NEV penetration rate exceeded 50% in 7 out of the first 9 months of this year.

So, this was mainly driven by the extension of favorable policies, et cetera. So, we believe for next year, the overall market -- auto market is expected to continue to undergo structural adjustments, which will redefine how consumers to make their purchasing decisions.

At the same time, the China's auto industry continues to remain under high pressure, which has been lasted so long. And this pressure includes severe capacity -- overcapacity, declining profit margins and intense or fierce market competition, et cetera. So, we see both traditional automakers or dealers also undergoing such business pressure.

So confronted with both price wars and shrinking profit and margin, we see OEMs and dealers alike. So, they have raised their expectations for both online consumer acquisition and offline sales conversion efficiency.

Looking ahead to next year, we believe the following few points merit our attention. We believe there are short-term challenges, but it coexists with long-term opportunities because the auto market still face significant short-term pressures, mainly stemming from the shift of the NEV purchase tax exemption policy from full exemption to half exemption and the expiration of tax incentives for the ICEs. So combined with the price war in traditional ICEs, all such factors may further impact the auto market.

Despite the above short-term pressures that we just mentioned, there are still upgrades in intelligent technologies, improvements to and recovery in the market order, and if there's further supported by introduction of additional long-term policies, we believe it will still stimulate consumer demand in the auto market and the market is expected to achieve modest and steady growth in 2026.

So, for us, for Autohome, we will continue to deepen our AI and auto strategies, as I just mentioned. On one hand, we will keep advancing the product innovation and upgrades, accelerating the application of AI technology across content, intelligent customer services and scenario-based services, et cetera.

On the other side, we will continuously explore ways to leverage our online and offline resources to achieve integration, build a closed loop for auto transactions and better serve our users and clients.

The second question is our AI product progress. So, in the field of intelligent technologies, we have already completed the strategic layout of multiple products, built a technology product mix. Spans the entire life cycle of auto consumption and continuously we drive improvement in both user experience and customer business efficiency.

For our users, our AI smart assistant and the used car AI smart buyer are continuously being upgraded. The new generation of the smart system has moved beyond simple question-and-answer model to proactive understanding and links provision. So, it can automatically identify the car models and series mentioned in the conversation and directly push product links. So, it shortened the users' search process and improve our decision-making efficiency.

And for our clients, we have deployed 5 major AI product lines covering core business scenarios such as marketing insights, online customer acquisition, store visit invitation, dealer store operations and used cars, et cetera. So, through the intelligent tools, we can continuously empower our business team members and to realize the full chain digital operations.

And for our technology foundation, we have our own proprietary Cangjie large language model. For example, our used car AI smart buyer is powered by this Cangjie engine, and it is -- besides, it is combined with Autohome's unique data assets, so it can deliver highly accurate and efficient recommendations, achieving a high degree of matching between the vehicle sources and the user needs.

So currently Autohome is comprehensively and vigorously promoting the AI-driven upgrade of the products, achieving a comprehensive transformation from the underlying architecture to application scenarios. So, in the future, we will continue to deepen the integrated application of AI across multiple scenarios using the technological innovation to drive an efficiency revolution in the auto sector in the industry.

The next question comes from the line of Xiaodan Zhang from CICC.

[Interpreted] So can management share your outlook on the traditional business for the upcoming quarters? And also, is there any update on the shareholder return plans?

[Interpreted] Thank you for your question. In the third quarter, we do see that the OEM promotional discount still remains at high level and the price war has been there for so long. And the overall discount for OEMs has already exceeding 23%. So, for the car sales volume and profit, I still remain concentrated among the leading companies. So, the price cutting for volume strategy has made a lot of OEMs to control their marketing budgets.

For the media services revenue in Q3 still declined year-over-year, but the decline has narrowed down significantly. And the continued decline is mainly due to the continued pressure from the OEMs price war in the market. And as Q4 approaches to the year-end, and we believe OEMs is expected to maintain high professional discounts to boost their sales revenues and this still put pressure on our media services revenue. So, we do expect we will achieve a slight year-over-year decline.

For our lead generation business, because of the market inventory backlog and the inverted pricing, so dealers continue to face operational pressure, and we see that over 50% of dealers operating at a loss in the first half of the year, and it doesn't look very optimistic for their survival for many dealers. So accordingly, our lead generation services also faced some ongoing pressure in the second half of the year.

Nevertheless, our customer penetration rate still remains at a good level. As the market -- once the market and customer operating conditions improve, our traditional business can be hit the bottom, rebound and stabilize. As I just mentioned, our media segment, business segment already narrowed down their decrease. And on the other hand, our innovative business developed quite strong, quite well. So, to some extent, our -- it offsets the situation of our traditional businesses.

On the shareholder return on dividends today, we just announced a cash dividend of RMB 1 billion for the second half of this year. And combined with RMB 500 million we announced in September, we have fulfilled our commitment to a total annual cash dividend of no less than RMB 1.5 billion for the whole year 2025. Our Board of Directors will continue this stable dividend policy.

On the share repurchase program, of the USD 200 million share repurchase program, until today, we have completed over 70% and the overall execution of this program is progressing quite well. So, in the next few months, we will continue to carry out the remaining share repurchase program.

For a long time, we have been committed to building a comprehensive shareholder return plan centered on the continuous dividends and the share repurchases, providing shareholders with predictable and stable shareholder returns. So, over the long term, we are very confident in our business operations in the future. So, we will continue to uphold our long-term stable and proactive approach to shareholder returns. We sincerely thank all shareholders for their long-standing strong support to the company.

The next question comes from the line of Ritchie Sun from HSBC.

[Interpreted] So I have 2. First of all, the gross profit margin it has been dropping year-on-year and Q-on-Q in first quarter. So why is that? And what is the trend going forward? Secondly, I want to ask about the energy space stores and satellite stores. So, what is the development progress and the 2026 target?

[Interpreted] Thank you for your question. Since the beginning of 2025 this year, so in order to accelerate the development of our new innovative businesses, we have been actively expanding in -- we have been actively developed our business and so it increased our upfront investment and consequently, it resulted in higher costs.

Specifically, our innovative business such as the new retail business has scaled up in the third quarter, as compared to the same period last year. For example, we soft launched Autohome Mall business in September. And although, this model is quite early in its early stage, but we observed where we get quite positive market feedback. And we believe such staged investments is quite necessary to -- for our future development for our -- to explore new avenues of growth and create much greater room for future development.

So, the gross margin of our transaction business, it cannot be -- of course, it cannot be compared for our traditional business. For example, the media business and the lead generation business is much lower than our traditional business.

So going forward, we will adhere to our consistent practice of the strict cost controls, and we'll hold the prudent principles in managing the scale of our investment. So, we will pay attention to our gross margin change. We will focus on that.

The second question is about Autohome space station and satellite stores development. The development of our offline network is always centered on using our digital technology to streamline the car purchasing process and improve the transaction efficiency. So, our advantage is in our ability to cover areas in low-tier markets where OEMs or dealers, they don't reach. So, we can help them to expand their sales network.

So, this business model is also being continuously upgraded and iterated. As I just mentioned, we are integrating the online and offline resources, bringing our online technology and the traffic advantages to offline. So, we try to transform from an auto content-oriented platform to a transaction service platform.

So, after we complete the controlling shareholder, we will continue to working on combining our online and offline efforts to provide platform services that are more convenient and efficient, and we try to find new ways to grow beyond our traditional business model.

Our final question comes from Brian Gong from Citi.

[Interpreted] I will translate myself. The used car market seems still a little bit weak recently. How does management view the outlook for used car market ahead?

[Interpreted] Thank you for your question. Since the beginning of this year, the used car market has generally shown a trend of rising transaction volume and the falling prices according to China Automobile Dealers Association, CADA, for the first half, the transaction volume for used cars rose 2% year-over-year, while the average transaction price decreased by 12% year-over-year. At the same time, we see there are 2 notable structural trends emerged in the market. First is the increased cross-regional flows. Second is the rapidly increasing NEV used cars sales.

While the transaction volumes are expanding, the operational pressures in the industry continue to intensify due to the impact of price wars in the auto market, we see the proportion of loss-making used car companies has expanded to over 70%, with lengthening average inventory cycles, continued high customer acquisition costs and intensified homogeneous competition, et cetera. But despite this, positive factors still remain.

For example, the trade-in policies have stimulated replacement demand and brought more high-quality used cars into the market with the new energy used car becoming a key growth engine. So, the CADA forecast for the full year, the used car transaction volume could exceed 20.5 million units, an increase of 4% to 5% year-over-year.

Currently, the used car sector has entered a crucial stage of deep adjustment and value chain reconstruction. The negative impact from the price cutting for volume model are gradually becoming apparent. However, China's large vehicle ownership base and relevant consumer demand provide strong support for the mid-to long-term development of the used car industry. So Autohome will continue to collaborate with industry partners to actively address challenges through refined operations and service upgrades, exploring new business models, unlocking new value to advance the used car industry towards high-quality development.

There are no further questions at this time. I'll turn the conference back to management for closing remarks.

[Interpreted] Thank you very much for joining us today. We appreciate your support and look forward to updating you on our next quarter's conference call in a few months' time. And in the meantime, please feel free to contact us if you have any further questions or comments. Thank you, everyone.

This concludes the conference for today.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]