Full Truck Alliance Co Ltd - ADR Stock

Ladies and gentlemen, good day, and welcome to Full Truck Alliance's Second Quarter 2026 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mao Mao, Head of Investor Relations. Please go ahead.

Thank you, operator. Please note that today's discussion will contain forward-looking statements relating to the company's future performance, which are intended to qualify for the safe harbor from liability as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and discussion.

A general discussion of the risk factors that could affect FTA's business and financial results is included in certain filings of the company with the SEC. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For a definition of non-GAAP financial results measures and the reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued earlier today.

Joining us today on the call from FTA's senior management side are Mr. Hui Zhang, our Founder, Chairman and CEO; and Mr. Simon Cai, our Chief Financial and Investment Officer. We will open the call to questions following a brief opening remarks from Mr. Zhang. As a reminder, the conference is being recorded. In addition, a webcast replay of this call will be available on FTA's Investor Relations website at ir.fulltruckalliance.com.

I will now turn the call over to Founder, Chairman and CEO, Mr. Zhang. Please go ahead, sir.

[Foreign Language]

[Interpreted] Hello, everyone. Thank you for joining us today for our second quarter 2026 earnings conference call. In the second quarter, despite a challenging market environment, our business delivered resilient growth with fulfilled orders reaching 68.5 million, up 12.7% year-over-year.

Operationally, we remain focused on enhancing user experience and transaction efficiency. By broadening and strengthening transaction protection for both shippers and truckers, we significantly improved the satisfaction across both sides of the platform. Average shipper MAUs reached 3.57 million this quarter, up 12.8% year-over-year, while the number of active truckers fulfilling orders over the past [ 12 ] months continue to grow, further amplifying our nationwide network effect.

Rising order density and trucker capacity lifted the fulfillment rate by 6.3 percentage points year-over-year to 47% with medium freight matching time further shortened. In terms of our new business initiatives, Qmove continued to gain strong momentum overseas with rapid growth in both fulfilled orders and fulfillment rate. We also achieved nationwide coverage for our less than truckload offerings through our network of dedicated line carriers and expanded autonomous delivery vehicle pilots to multiple cities. On AI front, we continued rolling out our shipper AI assistant to a broader user base and fully deployed AI-powered customer service across applicable use cases, further deepening AI applications throughout the fulfillment process.

[Foreign Language]

[Interpreted] Financially, in the quarter, total net revenues reached RMB 3.38 billion, up 4.4% year-over-year. Transaction service revenues grew 33.1% year-over-year to RMB 1.77 billion, accounting for 52% of total net revenues. Net income reached RMB 1.35 billion, up 6.3% year-over-year while non-GAAP adjusted net income increased 6% to RMB 1.43 billion.

Net cash provided by operating activities grew significantly year-over-year to RMB 2.15 billion, contributing to a total cash position of RMB 33.4 billion by end of the quarter. This provides ample liquidity to support the rollout of new business initiatives and execution of our long-term strategy, and we are committed to continuously returning value to shareholders through quarterly cash dividends.

Looking ahead, our comprehensive product portfolio, robust platform ecosystem and expanding 2-sided network give our AI initiatives the fuel they needed.

Transaction data at scale across [indiscernible] practical user cases. We will continue to advance AI innovation and applications across the platform to strengthen our ecosystem, improve the experience for shippers and truckers and create sustainable long-term value for our shareholders.

Thank you all once again. That concludes our opening remarks. I would now like to open the call to Q&A. Operator, please?

[Operator Instructions] Your first question comes from Ronald Keung with Goldman Sachs.

We'll move on to the next question. Your next question is from Eddy Wang with Morgan Stanley.

[Foreign Language] My question is that given the ongoing fuel price volatility and the rising penetration of electric trucks, do you expect these trends to significantly affect the freight industry's capacity mix and the competitive landscape?

Thank you, Eddy. This is Simon here. Let me address your question. Our platform data over the past few quarters does show gradually rising penetration of electric trucks, which now accounted for roughly over 20% of our total fulfilled orders. However, we do not expect this shift in the capacity mix to have a material impact on the long-haul full truckload market. Instead, we believe that our diverse energy mix across the truck fleet will benefit our platform ecosystem overall.

First, electric trucks are currently most competitive in short to medium haul and local freight operations. Lower energy costs give them a strong position at ports, mining area and fixed route short to medium haul transportation. While some fast charging and high-capacity battery models can now travel between 400 to 500 kilometers per charge that's up from roughly 200 to 300 kilometers per charge. Their economics still depend heavily on fixed routes, high vehicle utilization and convenient access to charging or battery swapping facilities.

Second, the electrification of ad hoc long-haul trucking still face clear physical and infrastructure hurdles. The average shipping distance for full truckload long-haul transactions on our platform exceeds 500 kilometers, and many of these transactions involve cross-regional transportation, variable routes and uncertain backhaul demand. In these settings, electric trucks are constrained by limited driving range, sparse charging and battery swapping coverage, payload loss from battery weight and reduced route planning flexibility.

As a result, they're not positioned to replace diesel and natural gas power heavy-duty trucks across this market anytime soon. Overall, we believe the evolving mix of truck capacity will create long-term value for our platform. Changes in transportation equipment do not reduce shippers' underlying freight demand. Instead, they allow it to be fulfilled at more competitive freight rates. Our long-term vision is to become a one-stop logistics platform, serving millions of small- and medium-sized direct shippers whose logistics needs are often on-demand, dynamic and fragmented.

As truck capacity becomes more diversified, we can further leverage our vast pool of authentic freight demand, extensive route data and advanced algo to match different powertrain types with the shipping distance and use case -- distance and use cases they are best suited for.

At the same time, by providing complementary services such as truck leasing and purchasing, charging and battery swapping, we can help truckers meaningfully improve vehicle utilization as battery technologies advance and roadside charging and battery swapping infrastructure expand, electric trucks should gradually extend into selected long-haul use cases. We expect our platform to benefit from this ongoing capacity upgrade and create greater value for millions of shippers.

Your next question will be from Ronald Keung with Goldman Sachs.

[Foreign Language] I want to ask about the fulfilled order growth was around 12.7% in the second quarter. So what were the key growth drivers this quarter? And given that the domestic fuel prices have declined significantly from the late kind of end March highs, has the impact on high fuel prices on road freight demand fully subsided? And how do you view order growth over the next few quarters?

Thank you, Ronald. The second quarter order volume growth was broadly in line with our expectations, driven primarily by continued improvements in freight order quality and fulfillment efficiency. First, our ecosystem, governance work and optimized user mix continue to pay off. Since the fourth quarter of last year, we have implemented targeted governance initiatives addressing misclassified car pooling orders, freight reselling and low-priced freight listing, which have significantly improved the authenticity of freight demand and fulfillment reliability.

Meanwhile, direct shippers have continued to grow as a share of our shipper base, further shifting our order mix towards genuine shipping demand. These improvements have strengthened truckers' willingness to accept orders leading to greater fulfillment reliability and efficiency. Second, more refined operations further improved our supply-demand dynamics.

During the past quarter, we continued to enhance our trucker credit rating program and freight payment protection mechanism. We directed more high-quality freight demand and core platform benefits towards truckers with strong fulfillment track records, increasing order acceptance among high-quality capacity. Meanwhile, freight payment protection helped alleviate truckers' concerns about payment defaults and other transaction risks, improving fulfillment reliability post match. As a result, the medium matching time of orders on our platform was shortened to 5 minutes for the first time, reflecting further gains in matching efficiency.

Third, solid growth in our full truckload long-haul business remained a key driver. Fulfilled orders in the segment grew faster than overall platform orders during the quarter on the strength of the supply-demand network, price discovery capabilities and capacity matching efficiency we have built in the ad hoc trucking market. These capacities widened our online platform advantages over offline channels and supported high-quality growth at scale.

Fuel price volatility since the beginning of the second quarter temporarily impacted both overall road freight demand and the growth of fulfilled orders on our platform. Domestic diesel prices remain elevated from the late March through May, in particular, dampening shipping demand for certain low-value price-sensitive freight.

Since June, consecutive diesel price cuts have gradually eased transportation cost pressures supporting a recovery in year-over-year order growth on our platform. Looking ahead, we remain cautiously optimistic about long-term order growth. Externally, the recent moderation in fuel prices should support gradual recovery in freight demand, although the road freight market continues to face a challenging and evolving macro environment.

In addition, the recent typhoon, flooding, earthquakes and other extreme weather events and natural disasters across various parts of China may cause some near-term disruption to freight shipping and transportation activities. Over the long term, we believe online penetration in the long-haul freight market still has substantial room to grow. We will continue to drive growth in fulfilled orders by expanding our direct shipper base, increasing penetration in the full truckload long-haul segment and further improving order quality through ongoing ecosystem governance initiatives.

The next question comes from Brian Gong with Citi.

[Foreign Language] My question is regarding fulfillment rate. Our fulfillment rate hit a record high of 47% in the second quarter. Can management share, what were the key drivers in the second quarter? And how do you expect this metric to trend going forward?

Thank you, Brian. Our fulfillment rate reached 47% in the second quarter that's up 6.3 percentage points year-over-year and 2.9 percentage points quarter-over-quarter, setting another record high. Fulfillment rates improved across all major business lines and shipper segments, primarily driven by systemic improvements in capacity allocation, freight demand quality and matching efficiency.

On the capacity side, effective truck supply remained abundant. Monthly active truckers responding to orders increased by nearly 5% year-over-year in the second quarter, supporting timely order responses and reliable fulfillment. Notably, the fulfillment rate for our full truckload long-haul business increased by nearly 7 percentage points making it an important driver of the overall improvement during the quarter.

Second, our ongoing ecosystem governance initiatives continue to improve freight demand quality across the platform laying a solid foundation for the increase in the overall fulfillment rate. In terms of product, further segmentation of our product portfolio and enhanced matching efficiency, we resegmented our freight product offering into 4 clear categories: express, entrusted shipping, general freight and less than truckload or LTL, each of them is designed for a distinct use case, rapid and satisfying short-haul matching, higher-quality [ pricing ] services, standard matching and LTL shipments through partnerships with dedicated line carriers, respectively.

Clear product positioning enables shippers to communicate their transportation requirements more effectively and allows the platform to match the most suitable capacity, reducing mismatches throughout the transaction and fulfillment process. From a user mix perspective, fulfillment performance improved across all shipper segments, the average fulfillment rate among direct shippers exceeded 65% while fulfillment among broker shippers also continue to improve. This demonstrates that the increase in the platform-wide fulfillment rate was driven not only by the growing share of high-quality direct shippers, but also the organic improvement in order quality and conversion efficiency across the broader shipper base.

We expect the platform's fulfillment rate to maintain a steady upward trajectory going forward as we continue to refine our operating strategies and product mechanisms while progressively integrating AI across the full matching and fulfillment process. We expect to unlock further gains in transaction efficiency. Thank you.

Your next question comes from Xin Chen with UBS.

[Foreign Language]

This is Xin Chen from UBS. My question is about the transaction service revenue. This revenue continued to grow rapidly in the second quarter, increasing by 33% year-on-year. What were the key growth drivers? And how do you view the outlook for this revenue?

Yes. The transaction service revenue reached approximately RMB 1.77 billion in the second quarter that's up 33% year-over-year. And this strong growth was primarily driven by the full rollout of our commission network, steady improvement in monetization per order and incremental contributions from emerging business use cases. Firstly, nearly full coverage of our commission network provided a solid foundation for our transaction service business.

During the second quarter, we completed the rollout of the commission model across all eligible cities, lifting the commission penetration rate to 94.7%. At the same time, our ongoing ecosystem governance initiatives continue to improve freight demand quality and drive the overall fulfillment rate higher, providing a larger and more reliable base of high-quality transactions for our commission model.

Second, refined operations continue to improve monetization efficiency. We dynamically optimize our commission strategy based on city, route, vehicle type and user segment. As we advance monetization, healthier trucker economics and the long-term health of our platform ecosystem remain essential prerequisite. Our commission strategy considers truckers' take-home earnings, willingness to accept orders, retention and fulfillment performance. We also improved truckers' operating efficiency through preferential access to high-quality freight demand, membership benefits, freight payment protection and operational subsidies. We firmly believe that protecting reasonable trucker earnings is fundamental to creating a sustainable virtuous cycle between the transaction scale and monetization.

As we move forward, we expect transaction service revenue to deliver high-quality, sustainable long-term growth, driven primarily by continued growth in fulfilled orders, higher monetization per order through refined and tiered operations and the scaling of new business cases.

Your next question comes from Wenjie Zhang with CICC.

[Foreign Language] My question is about freight brokerage business. Can you give us an update on the progress of transforming this business during the second quarter?

Thank you. In the second quarter, we made steady progress in transitioning our freight brokerage business from a traditional self-operated model to a dual track structure combining self-operated and aggregator operations. We're taking a phased approach to transition and optimizing the business mix in line with customer needs and compliance requirements. This enables us to reduce our exposure to VAT refund risks while continuing to meet shippers' needs for compliant VAT invoicing and freight matching.

First, we proactively managed the scale of the self-operated business while further improving its customer mix. Under this model, the platform continues to handle invoicing and settlement workflows primarily serving shippers with genuine freight matching needs. During the second quarter, invoicing-only customers declined further to a single-digit percentage of the total transaction volume.

Customers that continue to use this model primarily seek an integrated solution combining freight matching with VAT invoicing, reflecting continued improvement in the quality of this business. The take rate for the self-operated invoicing business remained stable at approximately 10% during the quarter. Second, the aggregator model continued to grow steadily, diversifying the underlying risk across a larger base. Under this model, invoicing and fund settlement workflows are handled by qualified third-party partners, while our own platform focuses primarily on matching freight demand with truck capacity and charges a low single-digit channel service fee.

Beginning in the second quarter, the associated revenue was recognized under freight brokerage business. This asset-light model significantly reduces the company's direct exposure to VAT refund, settlement and operational risk while keeping shippers and their freight demand within our platform ecosystem.

Going forward, we continue to manage a smooth transition between the self-operated and aggregator models and this will enable us to meet shippers' compliance demand, deepen user engagement and better support and reinforce our core freight matching business. As the asset-light revenue contribution from the aggregator model gradually scales, we expect the revenue mix and overall earning quality of the freight brokerage business to improve further. Thank you.

Next question comes from Ritchie Sun with HSBC.

[Foreign Language] I want to ask about the operating cash flow, which was RMB 2.15 billion in the second quarter, has been very strong growth. So what are the key drivers behind it?

In the second quarter, our net cash provided by operating activities reached RMB 2.15 billion, while free cash flow totaled RMB 2.04 billion reflecting strong cash generation across the business. This performance was driven primarily by a significantly improved profitability in our core platform business, the release of capital previously tied up in our credit business as a transition to a new model and efficient working capital management.

First, the high quality growth of our core business further strengthened our organic cash generation. Core platform businesses, such as transaction services are not only growing quickly but also benefit from an asset-light model with short cash collection cycles. As these businesses contribute a growing share of our revenue, our revenue and profit mix is becoming increasingly weighted towards businesses with higher cash conversion and significantly reinforcing the core business ability to generate cash organically.

Second, we continue transitioning our credit business towards asset-light distribution model, reducing the deployment of our own capital for new loans, while gradually recovering capital from the existing loan portfolio, the resulting reduction in capital tied up in this business contributed positively to the operating cash flow during the quarter.

In addition, we maintained a stable collection and settlement cycles and managed our working capital efficiently. And given the inherent asset-light nature of our platform model, rapid business expansion does not require a corresponding increase in capital deployment, providing further support for our working -- operating cash flow.

Looking ahead, our cash flow may fluctuate from quarter-to-quarter due to the timing of business settlement, tax payments and changes in working capital. Nevertheless, as our revenue mix continues to shift towards higher-margin asset-light platform business, we expect our long-term cash generation capabilities to strengthen steadily.

And that concludes the question-and-answer session. I would like to turn the conference back over to management for any additional or closing comments.

Thank you once again for joining us today. If you have any further questions, please feel free to contact Full Truck Alliance directly or reach out to Piacente Financial Communications. Our contact information for IR in both China and the U.S. can be found in today's press release. Have a good day.

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

Ladies and gentlemen, good day, and welcome to Full Truck Alliance's First Quarter 2026 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mao Mao, Head of Investor Relations. Please go ahead.

Thank you, operator. Please note that today's discussion will contain forward-looking statements relating to the company's future performance, which are intended to qualify for the safe harbor from liability as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions and other factors.

Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and discussion.

A general discussion of the risk factors that could affect FTA's business and financial results is included in certain filings of the company with the SEC. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purpose only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued earlier today.

Joining us today on the call from FTA's senior management side are Mr. Hui Zhang, our Founder, Chairman and CEO; and Mr. Simon Cai, our Chief Financial and Investment Officer. We will open the call to questions following a brief opening remarks from Mr. Zhang.

As a reminder, this conference is being recorded. In addition, a webcast replay of this call will be available on FTA's Investor Relations website at ir.fulltruckalliance.com.

I will now turn the call over to our Founder, Chairman and CEO, Mr. Zhang. Please go ahead, sir.

[Foreign Language]

[Interpreted] Hello, everyone. Thank you for joining us today for our first quarter 2026 earnings conference call. In the first quarter of 2026, amid a complex and rapidly evolving market environment, we remain committed to high-quality growth and digital innovation, driving steady business growth across the board.

[Foreign Language]

[Interpreted] Operationally, we delivered meaningful improvements in both scale and quality. First of all, our ecosystem governance initiatives yield notable results. Our credit rating program for truckers and shippers have raised conduct standards for on both sides of the platform, while our freight payment protection mechanism has substantially reduced payment dispute issues for truckers, driving higher user satisfaction and retention. Our enhanced user experience also fueled order growth.

Fulfilled orders reached 50.0 million this quarter, up over 14% year-over-year. On the shipper side, we continued to enrich our product portfolio and deepen user mindshare, bringing more off-line logistics demand onto our online platform. Average shipper MAUs reached 3.11 million this quarter, up 13% year-over-year.

On the trucker side, both truckers activity and fulfillment frequency increased steadily with overall fulfillment rate exceeding 44%, up 5 percentage points year-over-year.

On the innovation front, our AI shipper assistant is now deeply integrated into key workflows, including shipments posting, freight matching and shipment tracking, helping shippers reduce costs and operate more efficiently. We also launched pilot programs for autonomous delivery vehicles with unit economics, improving.

In addition, our less-than-truckload products have rapidly expanded to nationwide coverage via the transport capacity of dedicated line carriers, while Qmove continued to gain traction across 4 international markets. Taken together, these initiatives reflected our commitment to provide users with one-stop end-to-end transportation solutions, unlocking new long-term growth opportunities.

[Foreign Language]

[Interpreted] Financially, we achieved high-quality solid growth while continuing to optimize our revenue mix. In the first quarter, total net revenues grew by 5.5% year-over-year to RMB 2.85 billion. Excluding freight brokerage services, net revenues reached RMB 2.02 billion, up 17% year-over-year. Notably, transaction service revenues reached RMB 1.39 billion, up more than 33% year-over-year.

Net cash provided by operating activities increased significantly year-over-year to RMB 1.56 billion, reinforcing our operational resilience and building a strong foundation for future innovation and growth. Looking ahead, we will leverage our comprehensive product portfolio, healthy platform ecosystem and growing network effects on both sides of the platform, coupled with our vast repository of user behavior and transaction data to deepen AI application across the full logistics value chain, driving industry-wide efficiency gains and creating long-term value for both our users and shareholders.

Thank you all once again. That concludes our opening remarks. We would now like to open the call to Q&A. Operator, please?

[Operator Instructions] Your first question comes from Ronald Keung with Goldman Sachs.

[Foreign Language]

I want to ask about the fulfilled order this quarter that grew 14% in the first quarter. So quite a notable acceleration compared to last quarter. So what are the key drivers behind this? And how do you view -- look in the coming few quarters?

Thank you, Ronald. This is Simon Cai from Full Truck Alliance. So first quarter fulfilled order growth accelerated to 14.3%. That's ahead of our expectations, and that's primarily driven by 3 key factors. First, the impact of our platform governance initiatives continue to ease, and the associated benefits began to come through.

In the fourth quarter of last year, we intensified the governance efforts targeting misclassified carpooling orders, freight reselling and real-name verification which temporarily weighed on order growth during that period as we communicated before. As we enter the first quarter, these measures transition into business as usual operations, and their drag on order growth is tapering off.

More importantly, the structural improvements they have delivered across authenticity of freight demand, pricing discipline and fulfillment reliability are increasingly translating into tangible business momentum and reaccelerating order growth across our platform. This is the primary factor behind the acceleration in order growth in the first quarter.

And secondly, recent oil price volatility has highlighted our platform's advantage in transparent, efficient and price discovery as fuel prices climbed sharply from March onwards and drove greater freight cost volatility, off-line freight brokers and relationship-based trucking network struggled to pass through these cost increase to shippers in a timely and transparent manner.

In contrast, our platform enables real-time supply and demand-driven price discovery given our large verified trucker base, delivering more transparent and competitive pricing in highly dynamic market conditions. This superior pricing mechanism accelerated shipper migration from offline channels onto our platform and building a sharp rebound in shipping demand in the latter part of the first quarter.

And thirdly, enhanced operational efficiency drove a systemic improvement in fulfillment frequency across our user base. Throughout the first quarter, we continued investing in key product lines and operational initiatives. Notable examples include multiple iterations of our new freight zone feature, the extension of freight payment protection to our entire trucker base, including non-members, and deeper integration of our instant cargo function with our trucker credit rating program.

Together, these efforts strengthened our service capabilities across the full value chain and spanning freight posting, matching and fulfillment protection. The data mix is clear. Every shipper segment, including both broker and direct shippers delivered double-digit year-over-year growth in fulfilled orders in the first quarter, reflecting steady gains in user stickiness and repeat order frequency within an increasingly healthy platform ecosystem.

Looking ahead, we remain confident in sustaining solid growth in the coming quarters, supported by the continued benefits of our platform, governance initiatives, a growing share of orders from direct shippers and deeper AI penetration across matching and fulfillment. We are well positioned to deliver high-quality sustainable growth throughout the year. Thank you.

Your next question comes from Eddy Wang with Morgan Stanley.

[Foreign Language] From March onward, geopolitical driven oil price volatility has pressured truckers transportation cost. Has the company observed any impact on the platform? And what are the key measures taken in response?

Thank you, Eddy. Regarding the impact of transportation cost volatility on our platform, we believe that in the near future, the pass-through of higher fuel costs to freight rates may prompt some shippers of low-value goods to reduce or defer shipments, which could lead to some softening in long-haul freight demand.

Over the longer-term, however, with the online penetration of freight -- road freight still extremely low, the structural opportunity to help shippers reduce logistics costs and win shares from offline channels so far outweigh the near-term headwind from oil price-driven demand pressure.

In response to the oil price surge in March, we took several steps to protect trucker economics and prevent additional cost burden on truckers. For example, we implemented a freight rate fuel price linkage mechanism to keep freight rates aligned with rising fuel costs, including raising both the reference freight rates and bidding floor prices. In parallel, we launched a broad shipper outreach campaign on our apps to raise awareness of the fuel price environment and promote fair bidding practices.

Additionally, we continue to leverage our fueling business to help truckers manage fuel costs. Over the past few years, we have steadily expanded our fueling network to approximately 12,000 gas stations. Building on this foundation, we achieved a significant milestone in our core energy network strategy.

In late April, we formally entered into a strategic cooperation agreement with Sinopec. And this partnership has already gone live across Jiangsu, Zhejiang, and Anhui provinces with over 3,000 Sinopec stations now accessible on our platform. We expect to meaningfully expand this network through the remainder of this year.

Our fueling business operates under an asset-light facilitation model, leveraging on our platform, we are able to secure preferential fuel rates below prevailing benchmark prices from gas stations partners and pass these through to verified truckers as exclusive discounts net of a modest service fee. We also complement this offering with flexible subsidy programs calibrated to market conditions to help truckers reduce costs further.

For truckers, our model meaningfully lower per trip fuel expenses and provide tangible cash flow relief during a period of surge in oil prices. In this way, it not only serves as a practical economic buffer for the truckers, but also solidifies the effect, the active trucker supply and fulfillment capacity across our platform.

For FTA, our matching capabilities extend naturally beyond freight transactions into post-trade service scenarios such as fueling and broadening our service ecosystem while deepening trucker engagement and stickiness through our entire transportation journey.

Looking ahead, we will continue to broaden and deep our fueling network and expand strategic partnerships with key partners such as Sinopec in an elevated diesel price environment. The value proposition of our fueling business becomes increasingly compelling for truckers, and we're also confident that we can turn external fuel price volatility into an opportunity to grow our value-added services, enabling truckers on our platform to secure freight efficiently while meaningfully lowering their overall operating costs. Thank you.

Your next question comes from Brian Gong with Citi.

[Foreign Language] My question is about fulfillment rate. How did the fulfillment rate trend during the first quarter? And how does management expect this metric to evolve going forward?

Thank you, Brian. In the first quarter, the overall fulfillment rate was 44.1%, and it's up 4.9 percentage points year-over-year and 1.4 percentage points quarter-over-quarter. It also sets another new record. Notably, the average fulfillment rate for low and medium frequency direct shippers remain at a strong level of nearly 65%. The improvement in fulfillment rates reflects the combined effects of multiple initiatives driven primarily by 3 key factors: optimized order mix, enhanced operational measures and ecosystem governance.

First of all, the continued optimization in order mix is the primary driver. In the first quarter, fulfilled orders from direct shippers accounted for a growing share of total fulfilled orders. Direct shippers typically hold higher standards for fulfillment reliability and demonstrate strong execution commitment, making their growing share a direct contributor to the improvement in the platform's overall fulfillment performance.

Second, and more encouragingly, fulfillment rates among professional shippers, the 1688 members also improved year-over-year and quarter-over-quarter, in first quarter 2026. This 1688 cohort has historically lagged behind direct shippers in terms of fulfillment rate. So the progress here is particularly meaningful.

The improvement in the first quarter was driven by 3 factors. First, ongoing benefits from platform governance. As mentioned earlier, we cleaned up a number of platform integrity issues that are related to the users, including misclassified carpooling orders, cargo reselling and suspiciously low-priced freight listing. This has materially strengthened overall fulfillment reliability on the platform.

Second, structural improvement in the 1688 shipper base as real-name verification, shippers star rating and abnormal other behavior surveillance become part of our regular operations, lower quality shipper users naturally started to leave the platform. The shippers who have stayed are showing more genuine shipping demand and stronger fulfillment intent.

And thirdly, we made a series of targeted product and operational improvements. This includes a rebuilt shipping workflow within the shipper and mini program and a secondary confirmation step for new freight listings. Paired with upgrades to our matching algorithm, these upgrades drove structural improvements in matching efficiency and fulfillment conversion for professional shippers across standard shipping scenarios.

We continue to set up investment -- step up investment in key operational initiatives. In the first quarter, upgrades to truck-facing mechanisms such as extending freight protection coverage and deepening integration of instant cargo and trucker credit rating strengthened truckers' willingness to accept orders and bolster fulfillment reliability, and that translates to a meaningful uplift in our platform-wide fulfillment rate.

Looking ahead, we -- with continued refinement of our credit rating system, further expansion of our direct shipper base and ongoing phaseout of low-quality freight listings and deeper AI applications across both matching and fulfillment, we expect fulfillment rates to continue on a steady upward trajectory. Thank you.

Your next question comes from Thomas Chong with Jefferies.

[Foreign Language] Let me translate myself. In the first quarter, average shipper MAUs reached 3.11 million, representing a year-over-year increase of 12.7%. What were the primary drivers behind this growth?

Thank you, Thomas. Shipper MAUs continue to deliver double-digit growth in the first quarter, mainly driven by 3 factors: sustained gains in customer acquisition efficiency, expanding product benefits and strengthened user trust. First, multichannel user acquisition strategy continued to fuel our MAU expansion with overall acquisition efficiency elevating steadily.

In terms of channel mix, app stores, information feed ads and cross-brand partnerships remain the primary contributors. Specifically, the App Store channel continued to deliver strong acquisition efficiency, thanks to our ongoing optimization across campaign management, keyword strategy and the download page and conversion funnel. This also reflects the growing brand awareness and conversion power of the FTA brand among our target shipper base.

Information feed and SEM brand channels also delivered robust year-over-year growth in the first quarter with targeted reach ROI trending higher. Meanwhile, cross-brand partnership channels sustained solid growth, reflecting the initial success of our ecosystem collaboration efforts and our ability to integrate external traffic.

Second, by layering scenario-specific benefits on top of our core capabilities, we have effectively lowered the barrier to entry for shippers and deepened user stickiness. The foundational infrastructure we have built over time across intelligent matching, fulfillment protection and freight pricing represent the bedrock of our ability to consistently attract and retain SME shippers.

In the first quarter, while continuing to strengthen the long-haul transportation experience, we also introduced targeted product benefits for specific use cases. For example, a fee waiver for order posting within 200 kilometers. And these initiatives further lowered onboarding threshold for smaller shippers and ensure a reliable service experience across a broader range of transportation scenarios.

Third, our WeCom operations and referral-driven acquisitions have solidified into a powerful dual engine for user growth. In the first quarter, we continued to scale our WeCom outreach, leveraging high-frequency targeted engagement to effectively reactivate our existing user base. Notably, peer-to-peer referrals existing i.e., existing shippers bringing in new ones, remaining our highest ROI and highest quality acquisition channel.

Shippers acquired through referrals consistently outperformed platform average on key metrics, including order fulfillment rates and long-term retention.

Looking into the rest of the year, we will sharpen our focus on the quality and sustainability of user growth through continued strong execution of our multipronged user acquisition strategy anchored in branding, product benefits and referral-driven programs. We will keep refining our channel mix and rolling out scenario-specific products -- product benefit to elevate acquisition efficiency and strengthen our brand presence among targeted users.

In addition, we will deepen our commitment to user satisfaction, bolstering our service capabilities and protection mechanisms to strengthen trust and reinforce our professional reputation. Taken all together, these efforts will lay a solid foundation for sustainable and long-term growth. Thank you.

Your next question comes from Ritchie Sun with HSBC.

[Foreign Language] I want to ask about truckers activeness. Can you share how trucker engagement trended in the first quarter? And has order acceptance frequency amount active truckers continue to improve?

Thank you, Ritchie. In the first quarter, transportation capacity across the platform remained abundant and the supply mix continued to improve. Monthly active truckers responding to orders held steady at about 3 million, providing a solid backbone for fulfillment on our platform. Within newly onboarded active trucker capacity, the share of new energy vehicles continue to grow and supported by their lower operating costs and favorable policy tailwinds. They have emerged as an increasingly important supply source of high-quality carrier capacity on our platform.

Besides, increasing order acceptance frequency among active truckers was one of our key operational priorities this quarter, underpinned by a series of systemic upgrades to our fulfillment protection mechanism and trucker-facing tools. First, freight payment protection has been extended to all truckers, significantly reducing fulfillment-related risk. We expanded the program from members-only truckers to our full trucker base, and it now covers more than 90% of the freight listings on the platform.

For orders carrying the protection label, in the event of freight payment delays or defaults, the platform will proactively intervene to assist with the recovery efforts. If the dispute remains unresolved after the overdue period, the platform will directly cover the shortfall. This mechanism has effectively addressed truckers' key concerns around payment security and significantly boosting their willingness to accept orders and loyalty to the platform.

Second, we have deeply linked benefits with trucker credit rating to foster a healthier ecosystem. Specifically, core cargo finding features such as our instant cargo function are now directly tied to trucker credit rating and truckers with stronger fulfillment records and higher service quality receive more reliable access to premium freight opportunities. This has created a powerful positive incentive mechanism on the capacity side of the platform.

Lastly, our accelerating deployment of AI capabilities is driving meaningful individual efficiency gains. We're currently piloting an AI assistant for truckers that provides intelligent support across high-frequency transactional touch points such as cargo finding, price negotiation and query solution -- resolution.

The recent trucker data is encouraging. The average number of fulfilled orders per active trucker continued to rise year-over-year in the first quarter, while the median time to transaction completion remained near historical lows. This suggests that the convergence of increasing high-quality freight supply, ongoing matching, algo iteration and AI-powered tools enable truckers to respond to orders faster and chain trips more tightly, meaningfully improving overall vehicle utilization at the individual level.

We will remain focused on enhancing the trucker experience, refining protection mechanisms and upgrading tools and products. This means strengthening foundational systems such as freight payment protection and credit rating mechanisms to increase truckers' confidence in our fulfillment while also leveraging digital tools such as our AI assistant to improve truckers' order acceptance efficiency and unit economies. These initiatives will collectively strengthen our capacity base and support a sustained growth -- order growth and increased fulfillment across our platform. Thank you.

Your next question comes from Wenjie Zhang with CICC.

[Foreign Language] We saw that commission revenue grew by 33% year-over-year in the first quarter. What are the key drivers behind this? And what's the outlook for commission revenue going forward?

Thank you, Wenjie. As order volume growth gradually recovered in the first quarter, transaction service revenue remained -- maintained strong growth momentum, primarily driven by 2 factors. First, an increase in high-quality orders significantly improved the commission penetration rate, which was the core growth driver of transaction service revenue this quarter.

In the first quarter, commission penetration rate exceeded 94%, up roughly 9 percentage points year-over-year. This sharp increase was largely attributable to our ecosystem governance efforts in prior quarters. As low-quality and abnormal orders such as misclassified carpooling and cargo reselling are being structurally phased out, the supply of authentic high-quality orders has increased significantly and fulfillment rates have reached new highs for several consecutive quarters. This has allowed our commission model to extend smoothly and sustainably into a broader range of business scenarios.

Second, average monetization per order climbed at a moderate healthy pace. In the first quarter, average monetization per order reached roughly RMB 26.9, sustaining its steady year-over-year upward trend. And this growth is structurally very sound, underpinned by 2 factors.

First, the optimization of our tiered operations and refined pricing strategy continue to drive monetization efficiency within the existing commission scenarios. Second, there's a large volume of new orders has been brought into the commission system earlier this year. While these incremental orders generate lower initial commission rates and created modest near-term dilution, they present substantial monetization opportunities as we continue to drive higher average monetization per order over time.

Looking ahead, we remain confident in the continued growth of our transaction service revenue as newly monetized orders gradually mature and we continue to optimize our tiered to refined operations. We believe there's still room for improvement in both commission penetration and average monetization per order. At the same time, ongoing enhancement to our trucker membership system and the normalization of ecosystem governance will keep a stable, high-quality capacity base in place, reinforcing the foundation for transaction service revenue growth.

While maintaining our commitment to ecosystem health and user experience across both sides of the platform, we will continue to gradually optimize our monetization structure and driving transaction service revenue towards a more resilient and sustainable long-term growth trajectory. Thank you.

Your next question comes from Yuan Liao with Citic.

[Foreign Language] I have two questions. The first is can management share an update on the progress of the freight brokerage business transformation in the first quarter? And second question is related to AI, and could you share how AI is being applied across your company? And what is the key developments in the first quarter? And what is your plan for 2026?

Thank you, Yuan. So starting with your first question on freight brokerage. Our freight brokerage business maintained stable operations in the first quarter with ongoing improvements to both business structure and operating model. Beginning in this year, the business has formally transitioned into a dual track model, operating its own proprietary business in parallel with aggregator model.

Under the self-operated model, an extension of traditional freight brokerage business with revenue recognized on the freight brokerage business service item, FTA directly manages invoicing and settlement workflows. This model primarily serves SME shippers with genuine freight demand by providing a fully integrated end-to-end solution that combines VAT invoices issuance with freight matching.

Operations have continued at their established pace with take rate or service fee remaining stable at around 10%. Under the aggregator model, this is a newly introduced track with revenue recognized under value-added services segment that invoicing and settlement are handled by qualified third-party ecosystem partners, while FTA focuses on the underlying freight matching and capacity allocation, earning a channel service fee of roughly 1% to 2% per order.

This effectively repositioned the invoicing business from a GMV-driven model where the platform previously assumed full invoicing and settlement obligations to an SLI channel distribution model. From an operational standpoint, the decline of self-operated invoicing volume is the near-term outcome of our deliberate decision to reduce our self-operated exposure amid the evolving policy environment.

From an asset quality perspective, the customers we retained under this model remain predominantly SOE shippers with genuine freight demand with the invoicing plus freight matching orders representing the substantial majority of the transactions. Meanwhile, the aggregator model has ramped up steadily since the first quarter launch with associated revenue beginning to flow through under the value-added services.

Strategically, the transition to a dual track self-operated and aggregator model delivers 3 distinct benefits. First, it materially reduces direct exposure to regulatory policy risk. Under the aggregator model, the platform no longer bears direct invoicing and settlement obligations and fundamentally mitigating uncertainties from potential policy changes.

Second, it enables an asset-lighter operating profile and sharpens our focus on core freight matching capabilities while reducing both capital deployment and operating costs. Thirdly, it strengthens shipper retention. By leveraging aggregator partners to meet shippers' invoicing compliance needs, we are better positioned to keep users engaged within our freight matching ecosystem.

Financially, the invoicing business was never intended to be a core profit center. Rather, it serves as an operational infrastructure that anchors shipper loyalty and broaden the boundaries of our ecosystem. What we prioritize is the boost from the freight brokerage business to our core freight matching activity and the structural improvement it brings to our user mix.

Looking ahead, we will continue to gradually transition the freight brokerage business away from the self-operated model towards the aggregator model. This shift will ensure shippers' invoicing needs are continuously served while enabling the invoicing business to operate on a lighter, more sustainable footing within the evolving regulatory environment and better supporting the long-term development of our core platform business. So that's the response to your first question.

Moving on to your question on AI. In the first quarter, our AI initiatives advanced from exploratory phase to a stage of targeted capability refinement and focused testing. Centered on the core shipper transaction journey, we are progressively building an AI agent framework spanning the full transaction and fulfillment life cycle and encompassing dedicated agents for shipment posting, freight matching and other fulfillment alongside with AI-powered customer service.

Our key developments in the quarter were concentrated across the following product lines. For the shipment posting agent, we continue to build on last quarter's strategy around simplified posting and automated dispatch. We steadily expanded the pilot among direct shippers, sustaining a high end-to-end success rate. Pilot results show that fulfillment rates on AI-assisted posting were materially above average. That's a strong testament to the power of AI-driven matching and improving fulfillment efficiency.

Looking ahead, we plan to introduce multimodal capabilities such as screenshot-based posting to further streamline the posting experience while integrating WeCom and open APIs to meet enterprise system integration needs and improve posting efficiency. From our matching and fulfillment agents -- for our matching and fulfillment agents, core underlying capabilities went live in the first quarter. And since then, we have continue to refine their performance across intelligent query resolution, price negotiation and complex scenario handling.

The matching agent focuses on dynamic negotiation strategies across varying transaction scenarios alongside growing real-time voice interaction capabilities. This fulfillment agent centers on shipment tracking, intelligent customer support and deep intervention in high-frequency exceptions such as late arrivals and cancellations and steadily establishing an automated exception handling mechanism across the platform.

On the trucker side, our AI assistant continued to support high-frequency decision points such as freight finding and price negotiation and improving matching efficiency for truckers and unlocking latent capacity on the platform. Meanwhile, we continue to improve issue resolution efficiency and response speed within our AI-powered customer service system, driving structural improvements in both overall service quality and operating [ expenses ].

Looking ahead, we believe AI will continue to serve as the core technology foundation for improving operational efficiency and user experience across our platform. As we continue to refine our matching and fulfillment agents, we are also deepening the integration of our underlying models with the platform's high-frequency real-world transaction data, enabling AI to unlock greater value across matching efficiency, operating cost optimization and user experience. Thank you.

That concludes the question-and-answer session. I would like to turn the conference back over to management for any additional closing remarks.

Thank you once again for joining us today. If you have further questions, please feel free to contact Full Truck Alliance directly or reach out to TPG. Our contact information for IR both China and the U.S. can be found in today's press release. Have a good day. Thank you.

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

Ladies and gentlemen, good day, and welcome to Full Truck Alliance's Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mao Mao, Head of Investor Relations. Please go ahead.

Thank you, operator. Please note that today's discussion will contain forward-looking statements relating to the company's future performance, which are intended to qualify for the safe harbor from liability as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and discussion.

The general discussion of the risk factors that could affect FTA's business and financial results is included in certain filings of the company with the SEC. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued earlier today. Joining us today on the call from FTA's senior management are Mr. Hui Zhang, our Founder, Chairman and CEO; and Mr. Simon Cai, our Chief Financing and Investment Officer. We will open the call to questions following a brief of the opening remarks from Mr. Zhang.

As a reminder, this conference is being recorded. In addition, a webcast replay of this call will be available on FTA's Investor Relations website at ir.fulltruckalliance.com. I will now turn the call over to our Founder, Chairman and CEO, Mr. Zhang. Please go ahead, sir.

[Foreign Language]

[Interpreted] Hello, everyone. Thank you for joining us today for our fourth quarter and fiscal year 2025 earnings conference call. In the fourth quarter of 2025, amid a complex market environment, we continue to energize our ecosystem by elevating user experience and strengthening protection mechanisms for both shippers and truckers driving solid business growth across the board. Total fulfilled orders reached 63.9 million for the quarter representing a year-over-year increase of 12.3% and full year total fulfilled orders reached 236 million, up 19.8% year-over-year. Notably, full year orders fulfilled for cold chain logistics grew by nearly 30% year-over-year.

[Foreign Language]

[Interpreted] In terms of operational performance, key metrics across all business lines improved steadily in the fourth quarter. On the shipper side, our targeted user acquisition strategy and refined membership system gained momentum. Average monthly active shippers reached 3.28 million in the fourth quarter and 3.14 million for the full year 2025 marking year-over-year increases of 11.6% and 18.6%, respectively, demonstrating parallel improvements in both shipper base and user stickiness. For trucker users, we continue to optimize the trucker credit rating system and protection mechanisms, maintaining the 12-months rolling active trucker base at a high level and the next month retention rate for truckers who responded to orders above 85%, further strengthening the overall reliability and quality of our truckers network.

Our AI-powered heavy truck fleet delivered by Giga AI is now operating commercially in the express delivery and fast freight sectors. We also piloted AI assistant capabilities for shippers to further enhance fulfillment efficiency during the quarter. Moving forward, we will continue to accelerate the integration of AI technologies and applications across our transactions and fulfillment processes.

[Foreign Language]

[Interpreted] Now turning to our financial performance. We remain focused on enhancing operating efficiency to strengthen profitability. Net revenues reached RMB 12.49 billion for full year 2025, up 11.1% year-over-year. Furthermore, our revenue mix continued to improve with transaction service revenues of RMB 5.32 billion for the full year, growing by 38.2% year-over-year. On the bottom line, we achieved a net income of RMB 4.46 billion for the full year, up 42.8% year-over-year. On a non-GAAP basis, adjusted net income reached RMB 4.79 billion for the full year, up 19.3% year-over-year, underscoring our high-quality profitability and increasing economies of scale.

[Foreign Language]

[Interpreted] Looking ahead, Full Truck Alliance will consistently elevate user experience for both shippers and truckers and fully integrate AI across the logistics value chain, creating greater value for the industry while delivering long-term returns to shareholders and users. Thank you all once again. That concludes our opening remarks. We would now like to open the call to Q&A. Operator, please go ahead.

[Operator Instructions] Today's first question comes from Ronald Keung with Goldman Sachs.

[Foreign Language]

So looking back at 2025, then the company faced a number of external challenges and also made several strategic adjustments. So as we look into 2026, what -- can you share your overall strategic priorities?

[Foreign Language]

[Interpreted] 2025 was a year marked by both external challenges and proactive transformation for our business. During the year, we made significant progress in strengthening platform governance, improving operational efficiency and further optimizing our user structure and monetization quality. At the same time, we steadily advanced our strategic initiatives in areas such as autonomous driving and overseas markets. Throughout the year, we focused on enhancing the user experience and returning to our core principle of being truly user-centric.

Our goal is to build a platform that both shippers and truckers can trust. While some of these investments may not yield immediate measurable returns, we firmly believe that fostering healthy balanced user ecosystem will serve as a foundation for our long-term sustainable growth. That kind of ecosystem value is something yes, I think we can't replace.

[Foreign Language]

[Interpreted] As we move into 2026, we will focus on advancing high-quality growth and intelligent transformation across 3 areas. First, we are shifting our focus from scale-driven growth to a model that balances both scale and quality. While scale remains important for long-term sustainable development, our priority is to foster a mutually beneficial relationship between users and the platform. We are raising ecosystem standards to ensure more compliant and standardized transactions, greater protection for freight payment and higher user satisfaction.

With the first phase of our ecosystem governance initiatives now largely complete, most fake accounts and low-quality orders have been cleared from the platform. As a result, the platform is operating on a much healthier footing giving us the confidence to further strengthen fulfillment quality and support more sustainable growth going forward. Building on this foundation, we are also continuing to improve the credit rating mechanisms for both shippers and truckers, for example, through systems such as shipper rating scores and trucker behavior scores, we are gradually establishing a more robust 2-sided evaluation framework. This helps regulate user behavior at the source, curb noncompliant connections while also incentivizing high-quality users, ultimately creating a more virtuous cycle between shipper fulfillment efficiency and trucker earnings.

[Foreign Language]

[Interpreted]

Second, we are evolving from an information matching platform into an AI-driven intelligent infrastructure. Over the years, we have accumulated a large volume of authentic transaction data and built a highly active user base. which together provided a strong foundation for this transformation. Going forward, we will further leverage these strengths to advance and integrate our AI capabilities across key areas, including matching efficiency, credit assessment and dynamic pricing. In doing so, we aim to extend our platform's value beyond simply connecting supply and demand and enabling a more intelligent and efficient transaction process.

[Foreign Language]

[Interpreted] Third, while maintaining steady growth in our core business, we are laying the groundwork for additional growth drivers. We remain confident in the profitability of our mature business. Building on this foundation, we are advancing initiatives in areas such as overseas expansion and autonomous driving in a disciplined manner to support our growth over the next 3 to 5 years.

And our next question today comes from Eddy Wang at Morgan Stanley.

[Foreign Language]

I have 2 questions related to AI. The first one is that the AI technology is advancing rapidly and the rise of the AI agent is gaining significant attention. How might this trend affect freight matching platforms such as FTA? And how do you plan to respond to the potential disruption that AI agents could bring to the traditional platform model. And the second question is, can management share how AI is being applied across the company? And what's the key developments in the fourth quarter? And what is your plan for the 2026?

Thank you, Eddy. This is Simon here. I'll take over from now onwards. There has been a lot of discussion around the AI topic recently. We have been closely monitoring and evaluating its implications. Let me start with our core strategy. We see AI not as a threat to our business, but as a tool to enhance our capabilities. For the road freight industry in which FTA operates, the emergence of AI tools can significantly lower the barriers for shippers to find available carrier capacity, reduce manual costs in the matching process and improve both matching accuracy and fulfillment rates. These changes will meaningfully improve efficiency across the entire industry. We believe this transformation will create significant opportunities for us to capture additional market shares as transactions migrate from highly fragmented offline markets, including ad hoc and relationship-based trucking networks onto our platform.

In our view, AI presents more opportunities than challenges for our platform for AI models to deliver meaningful results in the highly non-standardized freight matching market. They must rely on large volumes of authentic, high-frequency closed-loop transaction data. This includes data such as quotes completed transactions, cancellations, fulfillment records, dispute resolutions, credit behaviors and verified logistics address database.

These data sets are the results of many years of operational experience and data accumulation on our platform. Let's take pricing as example first. In long-haul freight market, competitive real-time freight rates are not publicly available. The effective transaction price for each route and time period is influenced by multiple factors, including capacity availability, backhaul demand, trucker preferences and delivery time requirements. These dynamic pricing signals can only be formed and validated within the real transaction network. On our platform, truckers must complete real name registration and facial verification before logging into our app and accessing shipment information.

Negotiations between shippers and truckers are conducted through our in-app messaging tools and protected communication channels. While external AI tools, if there's any, let the basic data set to perform accurate pricing. Second, in the long-haul freight matching business, where fulfillment standards are high-end operational processes are complex, transactions involving far more than simply matching information. The capability to execute is critical. While external AI tools may help a shipper quickly obtain a price quote or even contact several truckers automatically moving our shipment from posting to final delivery requires much more than pricing. Effective fulfillment depends on robust platform services and dispatch capabilities, including understanding which truckers are reliable on specific routes, their likelihood of cancellation, how trucking capacity fluctuates during different time periods and maintaining a complete operational assistance from order placement to settlement to protect the interest of both shippers and truckers.

In addition, long-haul freight operations frequently involve exceptions and nonstandard situations. These may include specific vehicle requirements, trucks equipped with gates or refrigeration units. Last mile delivery address -- last-minute delivery address changes, adjustments to cargo volume, highway closure and damage disputes after delivery. Handling this situation requires well-established platform rules to determine responsibilities, extensive historical data to assess reliability and responsive dispatch network capable of quickly arranging alternatives when disruptions occur.

These are not capabilities that a stand-alone generative AI model can deliver on its own. They are built on years of operational experience and data accumulation and are precisely where our core competitive advantage lies. In addition, our platform connects a large number of shippers and truckers and through years of operation has formed a stable transaction network and credit system. Truckers and shippers not only rely on the platform to obtain orders and capacity but also depend on the platform for credit evaluation, fulfillment protection, dispute resolution and dispute resolution mechanisms. This long-term accumulation of trust and ecosystem relationships is something that a stand-alone AI agent application would find difficult to replicate.

Given these structural characteristics, we believe that as AI technology continues to mature, our competitive advantages will become even more pronounced. The reason is very straightforward. The more capable AI becomes, the more it depends on real transaction data and the stronger the resulting network effects. We're actively integrating AI capabilities across multiple aspects of our platform, including matching, dispatching, pricing, risk management and customer service. As matching becomes more efficient fulfillment become more reliable and exceptional handling becomes faster and more effective. Both truckers and shippers will naturally prefer to transact on our platform. This, in turn, leads to continued data accumulation and ongoing model improvement, which further strengthens our network effects and the moat around our platform.

Overall, we are very optimistic about the industry transformation and the opportunities brought by the AI era, and we are fully prepared to embrace the opportunities and challenges that come with this technological shift. For us, AI represents a capability upgrade rather than a disruption to our business model. We will leverage AI capabilities to capture the broader industry opportunities it creates making our platform more efficient and improving the user experience for both shippers and truckers. At the same time, these capabilities will further strengthen our network effects, thereby reinforcing our long-term competitive advantage in the road freight market.

To address your second question on our plan for AI for 2026. Yes. As I discussed earlier on the -- on our view on AI, let me walk through the progress we made over the past quarter and our plan onwards. During the fourth quarter, our AI initiatives progress from the experimental phase to broader deployment. We're currently building an AI agent framework that covers key scenarios across our platform, including shippers, dispatch operations and customer service gradually embedding AI capabilities throughout the entire transaction workflow. Starting with the user side, our focus from shippers is simplified shipment posting an automated dispatch. In the fourth quarter, we launched an AI-empowered assistant that enables shippers to submit shipping requests through a simple voice input via a floating entry point in the app.

The AI can then handle the entire workflow, including freight listing, trucker screening, price negotiation and order matching, significantly streamlining what previously required multiple manual steps. This capability is particularly beneficial for direct shippers as it lowers the barriers to posting shipments and improved shipping efficiency helping the platform better attract and retain SME shippers. This solution also supports WeCom-based shipment posting as well as API integration, delivering meaningful efficiency improvements for enterprise customers that require system integration. Our pilot results so far demonstrate the effectiveness of our AI-powered dispatch system. First, AI-driven dispatch has attracted a large number of valid trucker bids, reflecting that more accurate matching is increasing truckers' willingness to accept orders. And second, the vast majority of completed transactions are now processed entirely through automated workflows and the need for manual intervention continues to decline.

Compared to traditional freight listing, AI-driven dispatch is delivering superior outcomes in both transaction efficiency and fulfillment rates. In short, the AI assistant is helping shippers reduce the time required to find truckers and helping truckers improve order pickup efficiency and enhancing overall matching quality across the platform. Internally, AI has been integrated into our customer service operations, significantly improving response times and processing efficiency while also enhancing overall service stability. Looking ahead to 2026, AI will continue to serve as a core technology foundation for improving efficiency and enhancing user experience across FTA platform. As our models continue to evolve and data advantages deepen, we expect AI to unlock additional value in areas such as matching efficiency and operational cost optimization becoming an increasingly important driver of our medium to long-term growth. Thank you.

And our next question comes from Brian Gong at Citi.

[Foreign Language] I will translate it myself. With respect to the capital allocation, how does management prioritize among investments in core business growth, new initiatives and the shareholder returns?

Thank you, Brian. Our approach to capital allocation is guided by a very clear principle and that is to delivering sustainable returns to shareholders while maintaining healthy growth in our core business. We remain firmly committed to this objective and committed to creating long-term value for our shareholders. In 2025, we continue to deliver our commitment to returning value to shareholders through both dividends and share repurchases. Over the course of the year, we distributed approximately USD 200 million in cash dividend under our semiannual dividend policy. In addition, we continue to implement our share repurchase program to further optimize our capital structure. Since the beginning of 2025, we have repurchased approximately USD 52.4 million worth of our shares, demonstrating management's confidence in the company's long-term value.

In addition, in January 2026, we announced a medium- to long-term shareholder return plan. For 2026, we plan to return approximately USD 400 million to shareholders and today, we also announced a dividend of approximately USD 87.5 million for the first quarter. To support the shareholder return commitments, we must continue to strengthen our core business while identifying new growth drivers to sustain strong cash generation. As you know, long-term freight matching remains our primary source of cash flow and profitability and forms the foundation for our long-term competitive advantage. Looking ahead, we will continue to invest in user acquisition, technology upgrades, product innovations and ecosystem development to support a steady and sustainable growth of our core business.

With respect to strategic investments in new initiatives, including overseas expansion and autonomous driving, we emphasize a disciplined approach characterized by controlled pacing, manageable cash outflows and measurable milestones. We will not pursue high-risk asset heavy expansion. Instead, we will advance these initiatives in a measured manner with the evaluation of expected returns and progress at each stage. These investments are intended to build long-term growth capacity and further strengthen our competitive moat rather than pursuing short-term scale. Overall, we believe that the core business growth, investment in new initiatives and shareholder returns are not mutually exclusive objectives. We will strive to maintain a dynamic balance between growth and shareholder returns while preserving strategic flexibility.

And our next question today comes from Thomas Chong at Jefferies.

[Foreign Language]

We have seen the fulfilled orders grew by 12.3% year-on-year in Q4 and the growth rate is slowing down. Was this mainly driven by the ecosystem governance initiatives? How long do we expect this impact to last? And what is our outlook for order volume in 2026.

Thomas, that's a very good question. Let me first clarify the reasons behind the slowdown in order volume growth during the fourth quarter. The slowdown was primarily driven by the ecosystem governance initiatives, we proactively implemented on platform rather than any significant change in underlying freight demand. This round of ecosystem governance primarily focused on 3 areas. First, we addressed misclassified carpooling orders where Full Truck load shipments were posted as less-than-truckload orders. which can compromise transportation safety and fulfillment experience. And second, we strengthened real name verification requirements for both truckers and shippers which resulted in the removal of a number of fake or noncompliant accounts.

Thirdly, we implemented systematic measures to curb freight with selling and other irregular transaction activities. These issues had accumulated over time, and we were beginning to -- and were beginning to affect the platform and reliability. Therefore, we believe it was both necessary and timely to address them through a focused governance. These governance measures primarily affected low-quality orders with limited monetization potential. During the initial phase of the governance initiatives, some of the misclassified carpooling orders have shifted back to the full load product -- Full Truck load product while others have temporarily moved to offline channels. We view this as a normal structural adjustment. From a revenue perspective, these orders historically contributed only a small portion of the platform's revenue.

And in fact, transaction service revenue, as you can see, still grew by nearly 30% year-over-year in the fourth quarter, which clearly demonstrate that the ecosystem governance has not affected the platform's core monetization capability. Based on the results achieved so far, the governance initiatives have delivered meaningful improvements, for example, the resale and trading of trucker accounts on third-party platforms have been nearly eliminated, and the trucker vehicle verification rate is now close to 100%. In addition, freight reselling activities in January decreased significantly compared with the end of third quarter and customer complaint rates have continued to decline. At the same time, trucker engagement has remained stable with the rolling 12-month active trucker base, maintaining at a high level and the next month's retention rate for truckers responding to orders exceeding 85%.

The principal measures under this round of governance have been largely completed, and the main impacts have been fully reflected. Real name verification has been fully implemented, freight reselling is now managed under a normalized framework and misclassified carpooling orders have been structurally addressed through product rules. As we move to 2026, our focus will shift from targeted governance campaigns to continuous optimization. We will leverage credit scoring and algorithm model to safeguard the long-term health of the ecosystem and placing greater emphasis on balancing growth pace and operational quality. In the near term, we do not expect to carry out another large-scale governance campaign.

Based on our operating data so far into the year in 2026, sequential order growth has already shown clear signs of recovery. Looking ahead to the full year as the impact of governance initiatives continue to diminish, the share of direct shippers continue to increase and matching efficiency further improves, we remain cautiously optimistic about steady order growth on our platform in 2026. Thank you.

And our next question comes from Ritchie Sun at HSBC.

[Foreign Language]

My first question is about the fulfillment rates. So how did the fulfillment rate perform in fourth quarter? And what is the outlook for this metric. And secondly, in terms of the commission revenue growth is nearly a 30% year-on-year growth in fourth quarter despite slower order growth. So what were the key drivers behind this? And what is the outlook for this set metric going forward?

Thank you, Ritchie, for your question on fulfillment rate. In the fourth quarter, the overall fulfillment rate reached 42.7%, representing a year-over-year increase of more than 5 percentage points, and it also set a new record. Notably, the average fulfillment rate for the mid- and low frequency direct shippers approach 65%. This is a key metric we monitor closely. And as this segment represents a higher quality source of freight demand. Several factors drove the improvement in the fulfillment rate. First, we implemented systematic optimization to our cancellation policy. Historically, arbitrary cancellations by both truckers and shippers weighted heavily on fulfillment rate. In the fourth quarter, we introduced 2 key measures. We increased the cost of unjustified cancellations by imposing behavioral restrictions on users with frequent cancellations.

And we also upgraded our credit scoring system. The evaluation framework shifted from a primary focus on transaction frequency to a more holistic assessment of behavior quality with greater emphasis on fulfillment rates, user ratings and complaint rates. These adjustments are designed to encourage more consistent and responsible transaction behavior among both truckers and shippers. Secondly, the continued improvement in our user mix also contributed to the higher fulfillment rate. In the fourth quarter, fulfillment orders from direct shippers accounted for 55% of total fulfilled orders up from the previous quarter. And direct shippers generally have higher expectations for fulfillment reliability and a stronger commitment to execute so the increase in their share directly supported the improvement in the platform's overall fulfillment performance.

Thirdly, ongoing product enhancement also contributed to the improvement. In the fourth quarter, we continue to iterate on the new freight zone and introduce a secondary confirmation step for shipment posting, which improved fulfillment rates for newly listed shipments. At the same time, upgrade to our matching algorithm and more refined operations significantly accelerated truckers' response times, supporting a steady increase in transaction conversion rates. Looking ahead, as our credit scoring system continues to improve, the base of direct shippers expand and low-quality freight listings are further phased out. We expect fulfillment performance to maintain a steady upward trend. This will not only enhance the user experience, but also support further monetization of the platform.

Regarding your second question on commission revenue growth. In the first -- in the fourth quarter, transaction service revenue reached approximately RMB 1.49 billion. That's a year-over-year increase of around 28%. Despite the moderation in order volume growth, revenue maintained a relatively strong growth momentum primarily driven by 2 factors. The first driver was the continued increase in commission penetration. In the fourth quarter, commission penetration rate reached 88.6%, up roughly 6 percentage points year-over-year. The number of cities covered by the transaction covered by the commission model reached 273 effectively achieving nationwide coverage across major freight markets. This improvement reflects the platform's continued progress in identifying high-quality freight demand, ensuring fulfillment reliability and enhancing matching efficiency, enabling the commission model to be applied to a broader range of orders.

The second driver was the improvement in monetization per order. Q4 average monetization per order reached RMB 26.3, this reflects the effectiveness of our refined tiered operating strategy by offering differentiated services tailored to different shipper segments, we improved monetization efficiency and overall profitability while safeguarding the interest of truckers. Looking ahead, we remain confident in the continued growth of our transaction service revenue. There's room to further optimize both commission penetration and monetization per order. At the same time, continued enhancement of our trucker membership program will help ensure a stable supply of high-quality transportation capacity and further strengthening the foundation for transaction service revenue growth. Going forward, we will continue to refine our commission structure and operational strategies without compromising user experience to support more stable and sustainable long-term growth in this particular revenue stream.

And our next question comes from Wenjie Zhang with CICC.

[Foreign Language] I'll translate for myself. My question is about Credit Solutions business within value-added services. I wonder what's related to the progress of this business.

Thank you. In the fourth quarter, amid an evolving regulatory environment, we continue to advance our credit solutions with a focus on compliance, risk management and business model transformation and maintain a steady pace of development. As of the end of the fourth quarter, we completed the transition to interest rates of 26% or below for both existing and newly issued loans, reflecting our proactive alignment with regulatory guidance and commitment to compliance. While this adjustment created some short-term pressure on revenue, we believe it will support a more robust and sustainable financial services framework over the long term and lay a stronger foundation for our future growth. In terms of asset quality, our overall risk exposure remains manageable. Since mid-last year, regulatory changes across the credit industry have led to fluctuations in credit risk and our credit business has also been affected.

In the fourth quarter, the 90-day delinquency ratio reached 2.9%. In response, we proactively tightened our risk management measures by raising credit approval thresholds for both new and existing users and implementing earlier interventions through model optimization and a more tiered risk control framework. As a result, our outstanding loan balance remains at a healthy level, and the overall risk exposure is well contained. Looking ahead, while some volatility may persist in the coming months, we expect asset quality to gradually improve with the overall NPL ratio stabilizing and beginning to decline in the second half of this year. In terms of our business model, we are proactively transitioning towards a more asset-light approach. We have established partnerships with multiple banks and financial institutions and are increasingly originating loans through guarantee backed and affiliation models.

This approach allows us to significantly reduce the use of our own capital while maintaining service coverage and improving capital efficiency and better managing risk exposure. As a result, we are building a more balanced and sustainable risk return profile for our credit business. And overall, we will continue to prioritize compliance, maintain disciplined risk management and support our core business through our credit operations. Going forward, we will balance growth and risk while further improving asset quality and expanding penetration across operational scenarios. This will help ensure that our Credit Solutions business develops in a more sustainable manner as the regulatory environment continues to evolve.

And our next question comes from Yuan Liao with CITICS.

[Foreign Language]

Can management share us what progress have you met in your overseas business so far. And so what are the trends for your city expansion and your strategic priorities for 2026. And is there any time line for your monetization of your overseas business?

Thank you. Our overseas business is an important part of our mid- to long-term growth. We're building our international operations under the QMove brand, and we are currently in the model validation and capability replication stage. In terms of our market selection logic, the emerging markets, we're targeting share key trails. Large road freight volumes, low level of digitalization, highly fragmented truckers and the shipper base, large information gaps and high reliance on traditional broker models. This is very much like China over a decade ago. And much like China over a decade ago when we first started our business.

This makes our domestic experience and capabilities highly transferable allowing us to replicate our model in those markets with minimal learning curves. We are pursuing an asset-light and localized approach advancing investments gradually as we validate the business model and team capabilities, leveraging our technology and operational know-how to drive platform rollouts. QMove is already integrating fragmented local trucking capacity in select markets and steadily building user network on both the trucker and shipper side. The priority for 2026 remains deepening our presence in existing markets while expanding into new ones in a disciplined manner.

We will first focus on boosting network density and user engagement in established countries while gradually advancing city expansions in markets that are operationally ready and steadily broadening the platform's reach. We maintain a pragmatic, flexible attitude toward -- regarding the pace of the monetization. Emerging market, digital freight platforms typically progress through user acquisition, network formation and efficiency improvement before reaching stable commercialization. With timing varying by market, our priority is to grow the platform network and expand our user base sustainably rather than simply pursue early monetization at the expense of long-term growth.

And in summary, we remain confident the long-term growth potential of these emerging markets whose digital transformation is expected to follow a path very similar to China's road logistics industry. We'll continue expanding overseas in a disciplined, steady manner and gradually move towards commercialization as the operating model matures. Thank you.

Thank you. And that concludes the question-and-answer session. I would like to turn the conference back over to management for any additional or closing comments.

Thank you once again for joining us today. If you have any further questions, please feel free to contact FTA directly or reach out to TPG. Our contact information for IR in both China and the U.S. can be found in today's press release. Have a great day.

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

Ladies and gentlemen, good day, and welcome to Full Truck Alliance's Third Quarter 202 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mao Mao, Head of Investor Relations. Please go ahead.

Thank you, operator. Please note that today's discussion will contain forward-looking statements relating to the company's future performance, which are intended to qualify for the safe harbor from liability as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and discussion.

A general discussion of the risk factors that could affect FTA's business and financial results is included in certain filings of the company with the SEC. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purpose only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued earlier today.

Joining us today on the call from FTA's senior management are Mr. Hui Zhang, our Founder, Chairman and CEO; and Mr. Simon Cai, our Chief Financing and Investment Officer. Management will begin with prepared remarks, and the call will conclude with a Q&A session. As a reminder, this conference is being recorded. In addition, a webcast replay of this call will be available on FTA's Investor Relations website at ir.fulltruckalliance.com. I will now turn the call over to our Founder, Chairman and CEO, Mr. Zhang. Please go ahead, sir.

[Foreign Language]

[Interpreted] Hello, everyone. Thank you for joining us today on our third quarter 2025 earnings conference call. In the third quarter, FTA continued to reduce logistics costs and enhance efficiency across the road freight industry by leveraging digital and intelligent technologies amid a complex and evolving macro environment. Anchored by our core user-centric ethos, we strengthened our user protection mechanisms, enhanced our platform ecosystem and further elevated the overall experience for both shippers and truckers.

Our ongoing enhancements to transaction efficiency and service quality drove total fulfilled orders to 63.4 million, a year-over-year increase of 22.3%. This continued growth underscores the company's -- the industry's accelerating transformation from traditional off-line logistics transactions to digital and intelligent logistics solutions.

[Foreign Language]

[Interpreted] Furthermore, we consistently improved operating metrics across 3 key areas during the quarter, user operations, ecosystem development and technology enablement. For shipper users, we further expanded our brand visibility and drove targeted user acquisition of SME shippers, while refining the user experience across different cargo categories and freight scenarios. As a result, average monthly active shippers reached 3.35 million in the quarter, up 17.6% year-over-year.

The number of shipper members grew significantly year-over-year, reflecting rising user engagement and stickiness. In addition, fulfilled orders contributed by direct shippers increased to 54%, demonstrating ongoing optimization of our user structure.

[Foreign Language]

[Interpreted] In terms of trucker ecosystem, we continue to promote and enhance our trucker credit rating and membership program to incentivize high-quality service and elevate trucker benefits. These initiatives boosted capacity and increased reliability of truckers, driving the overall fulfillment rate to 40.6%, an increase of approximately 6 percentage points year-over-year. Simultaneously, we reinforced our trucker protection framework to better safeguard their rights and interest.

By the end of the quarter, the number of active truckers fulfilling orders over the past 12 months reached 4.48 million, marking another historical high.

[Foreign Language]

[Interpreted] On technology, we accelerated full chain AI deployment across the platform, leveraging our extensive scenario-based logistics data to address critical pain points in freight matching. Moreover, the successful acquisition of Giga.AI, previously known as Plus PRC, significantly bolstered our AI capabilities and the technological foundation, positioning us for sustained innovation and operational excellence.

[Foreign Language]

[Interpreted] Our robust operational performance this quarter translated into healthy financial results. Total net revenues reached RMB 3.36 billion, representing a year-over-year increase of 10.8%. Transaction service revenues grew 39.0% year-over-year to RMB 1.46 billion, accounting for 43% of total revenues and reflecting continued optimization of our revenue mix.

Non-GAAP adjusted operating income reached RMB 849.1 million, while non-GAAP adjusted net income reached RMB 988.1 million.

[Foreign Language]

[Interpreted] Looking ahead, FTA will continue to penetrate the road freight market and cultivate a resilient and sustainable ecosystem for both shippers and truckers, driving the industry's digital and intelligent transformation and empowering enterprises with greater logistics competitiveness through continuous technological innovation. Thank you all once again. Now I'll pass the call over to Simon, who will provide an update on our third quarter's business progress and financial results.

Thank you, Mr. Zhang, and thank you all for joining today's earnings conference call. I will now provide an overview of our operational highlights and financial results for the third quarter of 2025, starting with our operational performance. During the quarter, we sustained solid growth momentum with continued improvements in key operating metrics, highlighting the strength and resilience of our business model.

Despite challenging macro conditions and adverse weather such as typhoons in certain regions that temporarily disrupted freight demand during the quarter, we continued to deliver strong order volume growth. Total fulfilled orders once again significantly outperformed the broader freight industry, reaching 63.4 million in the third quarter, representing a year-over-year increase of 22.3%.

The steady growth in fulfilled orders was driven by the healthy engagement of our shipper users and the ongoing enhancement of our fulfillment service infrastructure, leading to improvements in both scale and service quality. In the third quarter, our overall fulfillment rate reached 40.6%, increasing by more than 6 percentage points from the prior year period. Specifically, the average fulfillment rate of mid- and low-frequency shippers reached nearly 60%, and their contribution to total fulfilled orders increased to 54%.

The positive outcomes are the results of our ongoing optimization in shipper structure, which further strengthened the reliability and sustainability of our ecosystem. These achievements underscore the effectiveness of our long-standing refined operations strategy, laying a solid foundation for the platform's long-term high-quality growth. Turning to user growth. Average monthly active shippers reached 3.35 million in the third quarter, increasing by 17.6% year-over-year.

Our shipper membership program continued to gain traction with over 370,000 active members in the RMB 288 membership program during the quarter, representing a significant year-over-year increase. In the meantime, the 12-month rolling retention rate for shipper members held steady at around 80%, underscoring the strong appeal of our services and the high stickiness of our user base.

In addition, the number of active truckers fulfilling orders over the past 12 months hit a new record, increasing to 4.48 million in the third quarter, while the next month retention rate for the truckers who responded to orders was consistently above 85%. We're delighted to see that our trucker users continue to demonstrate strong platform loyalty. During the quarter, we also continued to enhance our trucker infrastructure by expanding the breadth and the depth of the rights protection program, which helped improve truckers' order acceptance rate and experience.

For example, supported by targeted incentive programs and diversified protection mechanisms, the number of trucker members continue to grow. These trucker members have significantly higher order acceptance rate as compared to nonmembers, creating a positive flywheel of user engagement, order growth and platform stickiness. Now turning to monetization. Building on a solid foundation of steady growth in order volume, we continue to explore and unlock monetization opportunities.

These efforts enable us to deliver another quarter of robust top line performance, despite strategic changes to some noncore business such as freight brokerage, backed by significant improvements in operating leverage. As a result, transaction service revenue grew 39% year-over-year to RMB 1.46 billion. To further break down, monetized order penetration rate reached 88.6%, up nearly 6 percentage points from the prior year period, and average monetization per order increased to RMB 25.9 from RMB 24.4 in the prior year period. These improvements stem from our deepened understanding of high-value users and our ability to meet their increasingly diversified needs through upgraded services and tailored incentive programs.

At the same time, our growing scale enable us to drive down unit operating costs, leading to enhanced monetization efficiency and profitability while maintaining fair tracker earnings and strong order fulfillment. Looking ahead, we remain keenly focused on further unlocking the monetization potential of high-value users, leveraging our intelligent freight matching system and flexible subsidy strategies. In addition, our refined and tiered membership system enables us to cultivate and empower our core transportation capacity, further reinforcing a virtuous cycle of user growth, operating excellence and profitability improvements. We're confident that we are well positioned to achieve our full year targets and deliver long-term sustainable value to our platform and stakeholders.

Now I'd like to provide a brief overview of our 2025 third quarter financial results. Our total net revenues in the third quarter were RMB 3,358.2 million, representing a 10.8% increase year-over-year, primarily attributable to an increase in revenues from freight matching services. Net revenues from freight matching services, including service fees from freight brokerage models, membership fees from listing models and commissions from transaction service were RMB 2,797.6 million in the third quarter, representing an increase of 9.6% year-over-year, primarily due to the rapid increase in transaction service revenues.

Revenues from the freight brokerage service in the third quarter were RMB 1,094.3 million compared to RMB 1,280.9 million in the same period of 2024, primarily attributable to a decrease in transaction volume and partially offset by an increase in service fee rate. Revenues from freight listing service in the third quarter were RMB 247.1 million, up 10.6% year-over-year, primarily due to the growing number of total paying members. Revenues from the transaction service in the third quarter were RMB 1,456.1 million, up 39% year-over-year, primarily driven by increase in order volume penetration rate and per order transaction service fee.

Revenues from value-added services in the third quarter were RMB 560.7 million, up 16.9% year-over-year. The increase was primarily due to growing demand for credit solutions. Third quarter cost of revenues was RMB 1,605.2 million compared with RMB 1,364.9 million in the same period of 2022, primarily due to increases in VAT-related tax surcharges and other tax costs, net of grants from government authorities. These tax-related costs net of government grants totaled RMB 1,427.2 million compared with RMB 1,221.6 million in the same period of 2024, primarily due to an increase in tax costs net of government grants related to the company's freight brokerage service.

Our sales and marketing expenses in the third quarter were RMB 438.8 million compared with RMB 412.5 million in the same period of 2024. The increase was primarily due to further investments in enhancing user ecosystem construction and protecting user rights and interest. General and administrative expenses in the third quarter were RMB 161.6 million compared with RMB 222.9 million (sic) [ RMB 227.9 million ] in the same period of 2024. The decrease was primarily due to lower share-based compensation expenses. R&D expenses in the third quarter were RMB 233.3 million compared with RMB 195.1 million in the same period of 2024.

The increase was primarily due to the inclusion of Giga.AI, previously known as Plus PRC's R&D -- Plus PRC's R&D costs, following the completion of our further investment in Giga.AI on July 9, 2025, and its subsequent consolidation into our financial results. Income from operations in the third quarter was RMB 776.3 million, an increase of 1.9 percentage from RMB 762 million in the same period of 2024. Net income in the third quarter was RMB 921 million compared with RMB 1,121.9 million in the same period of 2024.

Under non-GAAP measures, our adjusted operating income in the third quarter was RMB 849.1 million compared with RMB 884.5 million in the same period of 2024. Our adjusted net income in the third quarter was RMB 988.1 million compared with RMB 1,241.2 million in the same period of 2024. Basic and diluted net income per ADS were RMB 0.87 in the third quarter compared with RMB 1.06 in the same period of 2024. Non-GAAP adjusted basic net income per ADS was RMB 0.94 in the third quarter of 2025 compared with RMB 1.18 in the same period of 2024.

Non-GAAP adjusted diluted net income per ADS was RMB 0.96 in the third quarter of 2024 compared with RMB 1.17 in the same period of 2024. As of September 30, 2025, the company had cash and cash equivalents, restricted cash, short-term investments, long-term time deposits and wealth management products with maturities over 1 year of RMB 31.1 billion in total compared with RMB 29.2 billion as of December 31, 2024.

For our fourth quarter 2025 business outlook, we expect our total revenues to be between RMB 3.08 billion and RMB 3.18 billion compared with RMB 3.16 billion in the same -- RMB 3.17 billion in the same period of 2024. Excluding freight brokerage service, net revenues are expected to range from RMB 2.18 billion to RMB 2.28 billion, representing an estimated year-over-year growth rate of 17.1% to 22.5%. These forecasts are based on the company's current and preliminary views on the market and operational conditions, which are subject to change and cannot be predicted with reasonable accuracy as of the date hereof.

That concludes our prepared remarks. We would now like to open the call to Q&A. Operator, please go ahead.

[Operator Instructions] Your first question comes from Ronald Keung from Goldman Sachs.

[Foreign Language] I want to ask about fulfilled orders that had still maintained very solid growth momentum increasing 22%. So what were the main growth drivers? And can you share the outlook for the fourth quarter and next year?

Yes. Thank you, Ronald. Our fulfilled orders continue to outgrow the broader freight market in the past quarter due to key 3 factors. First, solid user acquisition provided a strong foundation for growth with deeper brand penetration among SMEs and steady improvement in the market's acceptance of online freight matching models, the number of newly registered shippers continue to grow organically.

In addition, we continue to focus on proactively reaching potential users through key touch points via highly efficient marketing channels, including app stores and high-traffic off-line placements such as high-speed railway stations. As a result, the first order conversion rate of new users improved substantially year-over-year. Secondly, higher engagement from existing users, coupled with ongoing product optimization continue to enhance our matching efficiency.

During the quarter, fulfillment frequency among shipper members further improved year-on-year, demonstrating strong customer loyalty and stickiness. On the trucker side, we introduced the new cargo zone, which highlights newly posted high-quality orders and help truckers secure attractive opportunities more efficiently and driving improved performance in matching and fulfillment.

On the shipper side, we further streamlined the order posting interface by removing or reducing unrelated entries and product sections. These initiatives made the order placement process more intuitive and efficient, significantly improved user experience and effectively boosted ratio repeat order intent. Third, the new business continued to drive incremental order -- incremental growth momentum, supported by improving service quality and growing user base, both our less than truckload and intercity businesses continue to deliver robust growth in the third quarter.

As these 2 businesses continue to mature and improve in operational efficiency, we expect that on top of the solid growth in our core full truckload business, they will further satisfy the diversified needs from both our new and existing shippers and supporting our long-term order volume growth. Looking ahead, we remain confident in our platform's order volume growth momentum. Despite ongoing macro uncertainty, our dominant position and rising digitalization penetration has driven deeper engagement among SME shippers and maintain stable member retention and enhanced matching efficiency consistently, all supporting sustained order growth.

At the same time, we will continue to optimize our user ecosystem by strengthening qualification reviews and credit rating systems to attract and retain highly credible, highly active users and laying a solid foundation for our high-quality order growth.

Your next question comes from Eddy Wang from Morgan Stanley.

[Foreign Language] In the third quarter, the number of the monthly active shippers reached 3.35 million, representing a year-over-year increase of 17.6%. What are the major drivers behind the growth?

Thank you, Eddy. In the third quarter, the number of monthly active shippers continue to grow very steadily, supported by more efficient multichannel user acquisition and organic growth driven by referrals. These drivers not only grew our user base, but also helped to strengthen the overall engagement and quality of our active users.

First, our highly efficient multichannel user acquisition efforts continue to drive steady growth in shipper users. We implemented a dual approach combining brand exposure and targeted conversion. We improved online acquisition efficiency by strengthening app store campaign management and optimized keyword search, while refining download page design and user conversion funnels. Offline-wise, we expanded advertising in high-traffic areas such as high-speed rail stations, subway business districts and key commercial hubs.

We also leveraged the scenario-based outreach channels such as truck stickers to reach SMEs with actual shipping needs. This integrated online and offline approach not only enhance brand awareness, but also effectively attracted high potential shippers, laying a solid foundation for sustained user growth.

Second, word-of-mouth referrals continue to serve as the primary driver of organic shipper growth. Unlike consumer-facing businesses, most shippers are small- and medium-sized business whose decisions are driven mostly by trust, often requiring longer conversion cycles, but resulting in higher retention and repeat purchase rates. During the quarter, we continued to invest in service reliability, capacity assurance and fulfillment experience optimization, further strengthening user trust.

As a result, word-of-mouth referrals from existing shippers became the most efficient channel for user acquisition. Notably, new shippers acquired through referrals tend to be of higher quality with stronger fulfillment rates and long-term engagement as compared with other acquisition channels, while coming at lower acquisition costs. Looking ahead, we will continue to pursue a dual engine growth strategy, combining brand-led acquisition and referral-driven expansion.

On one hand, we'll continue to optimize our marketing strategy to improve acquisition efficiency and the brand penetration within target user groups. On the other hand, we will enhance user satisfaction by improving service quality and strengthening protection mechanisms, reinforcing trust and professionalism within the shipper community. These initiatives will support high-quality sustained growth across the shipper ecosystem, supporting our long-term growth.

Your next question comes from Brian Gong from Citi.

[Foreign Language] I have a quick question on ecosystem improvement on trucker side. Can you give an update on key developments of trucker members in the third quarter?

Thank you, Brian. As of the end of September, our active trucker members continue to grow steadily, reaching almost 1 million members, achieving further growth compared with the previous quarter. Structurally, roughly 30% of trucker MAUs in the long-haul segments are membership subscribers and contribute to over 40% of order volume in the long-haul segment.

This data underscores the higher engagement and stronger stickiness of our trucker members who have become the core pillar of our capacity network. During the quarter, we continued to upgrade our trucker membership tiering system. The current framework focuses on 3 key dimensions for truckers: cost reduction, fulfillment enhancement and risk protection. Our commission coupons helped truckers effectively reduce service costs during order fulfillment and our premium cargo bidding cards increased truckers' visibility and ranking priority in matching with high-quality shipments.

We also relaunched the freight payment protection program, expanding its coverage scope, which further strengthened trucker trust and security during transactions directly addressing many of their fundamental operation needs. Overall, the trucker membership program has become a key driver in securing high-quality trucker capacity and improving fulfillment efficiency on platform.

Looking ahead, as we further expand membership benefits and refine incentive programs, we expect trucker programs to contribute to a growing share of our total transportation capacity and building a stronger and more sustainable foundation for continued order growth and fulfillment stability. Thank you.

Your next question comes from Yuan Liao from Citic.

[Foreign Language] Under the current policy environment of anti-involution. So how has the company implemented any measures to align with these policy objectives and offer enhanced protection of benefits to shippers and truckers.

Under the current policy environment of anti-involution, the -- so we basically -- against the overall background of anti-involution and promoting high-quality growth, our strategic directions remain clear. We will continue to pursue sustainable high-quality growth through ecosystem refinement, structural optimization and user protection enhancement.

First, we remain committed to enhancing ecosystem integrity with a key focus on advancing healthier user protocols by implementing ID verification and fulfillment credit scoring as well as refining user tiering. We enhanced the value of user accounts and increased switching cost, which in turn accelerates the exit of low-quality users. At the same time, we have shifted the focus of our credit rating system for both shippers and truckers from frequency of transaction to quality of their behaviors. This system evaluates metrics such as fulfillment rates, positive feedback rate and complaint rate, reinforcing both rewards and disciplinary measures to guide users towards higher standards and stronger trust, fostering a healthier platform ecosystem.

Second, we have focused on emphasizing fair pricing and healthy competition on our platform. For example, to prevent malicious pricing competition, we employ algorithms to identify and block abnormally low prices in real time, removing or restricting orders that fall significantly outside reasonable market price ranges. Additionally, we incorporated a price rationality weighting into our order matching, prioritizing the pairing of high-quality freight with reliable truckers. This approach protects truckers' earnings and enhances shippers' fulfillment certainty.

Together, these measures provide a robust technological foundation to promote healthy market behaviors between truckers and shippers. At the same time, we achieved notable progress in strengthening user protection and trust. Our upgraded comprehensive protection program currently provides full coverage for key risks for both user groups, including freight payment defaults, empty runs and cargo damages. To address truckers' top concerns of timely freight settlement, we have implemented a guaranteed compensation mechanism that provides trucker members with expedited reimbursement for freight, empty runs and cancellations, ensuring prompt payment and minimizing trust barriers throughout the fulfillment process.

Overall, we are building a more sustainable, efficient and transparent freight ecosystem by continuously optimizing user -- our user base, fulfillment certainty and matching and protection framework. Our focus on high-quality growth is reflected not only in a healthier user base, but also in continuous improvements in our service quality and governance.

Looking ahead, we will continue to focus on improving user trust, operational efficiency and fulfillment quality, driving the long-term sustained development of the freight industry and laying a solid foundation for our growth.

Your next question comes from Wenjie Zhang from CICC.

[Foreign Language] My question is regarding freight brokerage business. I wonder what's the latest progress of the business since the pricing adjustment in August. Could you give an update on user retention and profitability following these changes?

Yes. Thank you. The business generally performed better than we expected. So in the third quarter, our freight brokerage business transitioned to a higher service fee rate steadily and overall performance was good. Following the expected gradual removal of tax rebates and increasing service fee rates to between 10% to 11%, user behavior showed healthy structural improvement. From a user perspective, churn from shippers in third quarter was primarily concentrated among those who demanded frequent VAT invoicing service only and contributed to limited value to the platform beyond invoicing fees.

Conversely, retention rates among shippers with small and medium value -- VAT invoices remained above 80%, significantly exceeding our expectations. These users are generally less price sensitive and care more about the convenience of freight matching and fulfillment certainty, which kept their engagement rates stable following the policy adjustments. Currently, invoicing plus freight matching orders represent over 70% of the total orders in our freight brokerage services highlighting the growth importance of our matching service and the strong alignment between this business and the platform's core capabilities.

At the same time, we are closely monitoring user retention and structural shifts in our user base with a particular focus on the long-run stability of small- and medium-sized shippers and ongoing conversions of new users, ensuring that the benefits of these structural optimizations are sustained and reinforced. From a financial standpoint, the freight brokerage business primarily aimed to increase stickiness by enhancing shipper experience and platform engagement rather than a major profit contributor.

Although this -- its emphasis on invoicing results in relatively low margins and a limited impact on our overall profit, it still plays a strategic role in strengthening our user engagement and refining more order fulfillment. Looking ahead, we will continue to focus on improving the experience for small and medium-sized shippers, gradually expanding contribution from high-quality users and ensuring that the freight brokerage business delivers sustainable performance under the new policy.

Your next question comes from Ritchie Sun from HSBC.

[Foreign Language] In the first quarter, revenue from freight listing reached RMB 247 million, up 10.6% year-on-year. So what were the main growth drivers? And how do you feel the user payment conversion trends going forward?

Thank you. Revenues from our freight listing service continued to grow steadily in the past quarter, primarily driven by growth in paying users and the ongoing optimization of the membership structure. As of September 2025, the number of shipper members on our platform reached 1.27 million. The majority of the incremental growth came from the RMB 288 membership program, which was launched last year. This program was designed to meet the needs of small- and medium-sized business owners new to our platform.

By lowering the entry barrier and offering benefits such as freight rate coupons and other placement tracking, the program significantly improved membership conversion and user satisfaction. Looking at the membership mix, while the RMB 688 memberships achieved steady year-over-year growth in this quarter, the RMB 288 membership showed the most robust growth across 3 membership tiering with active members increasing by more than 300% compared with the same period last year.

The strong growth not only broadened our user base, but also strengthened the platform payment rate. Notably, the number of high-frequency shippers under the RMB 1,688 tier continued to decline, reflecting a structural shift in our shipper base. This change reflects the platform's ongoing optimization and matching efficiency and fulfillment guarantees, which are gradually replacing traditional agent roles and further enhancing the quality of our user ecosystem.

Turning to user conversion. Our latest data shows that around 20% of the users who reach the limit of their RMB 288 membership chose to upgrade to the RMB 688 tier. These results are aligned with our initial expectation when designing the program and underscore the effectiveness of our tiered membership system. Our membership business has established a healthy growth cycle that attracts users to low entry barriers, retains them with superior experience and drives upgrades through tiered benefits.

This model enables long-term and steady penetration among direct shippers and supports the high-quality growth of the overall business. In addition, retention among existing members remains robust, demonstrating solid user stickiness. As of the end of the third quarter, our 12-month rolling retention rate for shipper members held steady at around 80%, consistent with prior quarters. This validates our ongoing optimization in member experience and reflects strong recognition from shippers from our platform's reliable fulfillment capabilities and responsive service.

We expect the RMB 288 and RMB 688 memberships to continue driving growth in free listing service revenue. Meanwhile, as the platform continues to enhance features such as fulfillment protection and shipment tracking and payment conversion rates are expected to trend up steadily, we will continue to optimize our membership program and benefits aiming to further strengthen long-term user retention and lifetime value.

That concludes the question-and-answer session. I would like to turn the conference back over to management for any additional or closing comments.

Thank you all for joining us today. If you have any further questions, please feel free to contact us at Full Truck Alliance directly or TPG Investor Relations. Have a good day.

That does conclude our conference for today. Thank you for participating. 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, good day, and welcome to Full Truck Alliance's Second Quarter 2025 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mao Mao, Head of Investor Relations. Please go ahead.

Thank you, operator. Please note that today's discussion will contain forward-looking statements relating to the company's future performance, which are intended to qualify for the safe harbor from liability as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and discussion.

A general discussion of the risk factors that could affect FTA's business and financial results is included in certain filings of the company with the SEC. The company does not undertake any obligation to update these forward-looking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purpose only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued earlier today.

Joining us today on the call from FTA senior management are Mr. Hui Zhang, our Founder, Chairman and CEO; and Mr. Simon Cai, our Chief Financing and Investment Officer. Management will begin with prepared remarks, and the call will conclude with a Q&A session. As a reminder, this conference is being recorded. In addition, a webcast replay of this call will be available on FTA's Investor Relations website at ir.fulltruckalliance.com.

I will now turn the call over to our Founder, Chairman and CEO, Mr. Zhang. Please go ahead, sir.

[Foreign Language]

[Interpreted] Hello, everyone, and thank you for joining us today for our second quarter 2025 earnings conference call. In the second quarter, FTA demonstrated remarkable resilience in navigating both opportunities and challenges in the external environment, while leveraging digitalization and intelligent technologies we continue to help shippers reduce logistics costs and enhance operational efficiency across the road freight industry through improvements in fulfillment efficiency and optimization of the user experience our platform reached a new milestone with fulfilled orders totaling 60.8 million, a 23.8% year-over-year increase underscoring the ongoing ship -- shift from offline to online logistics operations.

Our key operating metrics also reached record highs in this quarter, reflecting meaningful progress across shipper growth, trucker capacity and matching efficiency as well as technology enablement. On the user front, we continue to invest in long-term brand building and online user acquisition among the 30 million potential SME shippers nationwide. Simultaneously, our refined operations across cargo categories optimize the shipping serene for existing users throughout the order placement, freight matching and fulfillment process. As a result, average shipper MAUs in the second quarter exceeded 3.16 million, a 19.2% year-over-year increase, while shipper members surpassed 1.2 million, demonstrating enhanced user engagement and stickiness. Notably, the order contribution from direct shippers rose to 53%, reflecting continued optimization of our user base.

To further boost our trucker capacity and enhance matching efficiency, we advanced our trucker credit rating and membership program, encouraging service quality improvements under the guiding principle of excellent service, more orders, higher income for truckers. We also strengthened the protection and support for truckers, enhancing the sense of value and recognition. By the end of the quarter, the number of active truckers fulfilling orders over the past 12 months rose to 4.34 million, up approximately 9% year-over-year, while trucker membership approached 1 million reflecting wider engagement and loyalty. Against this backdrop, our fulfillment rate reached a new high of 40.7%, an improvement of approximately 7 percentage points year-over-year.

On the technology front, we remain focused on addressing the core pain point in the freight matching process, leveraging our VAP and proprietary transaction data, we advanced AI-driven enablement across multiple key process for -- from matching to fulfillment externally and from sales and marketing to customer service and operations internally, enhancing both the overall user experience and our operational efficiency, driven by our disciplined high-quality operations, we delivered another quarter of exceptional financial results.

Total net revenue reached RMB 3.24 billion, an increase of 17.2% year-over-year, with transaction service revenue surging 39.4% year-over-year to RMB 1.33 billion. Non-GAAP adjusted operating income reached RMB 1.23 billion, up 76% year-over-year, while non-GAAP adjusted net income rose 39.3% year-over-year to RMB 1.35 billion.

Looking ahead, as a pioneer of new quality productive forces in the logistics sector, FTA will remain relentlessly user-centric. We will continue to strengthen the healthy development of both our shipper and trucker ecosystem, expand into new markets and drives the industry's digital and intelligent transformation. Through these efforts, we aim to empower enterprises with greater logistics competitiveness.

Thank you all once again. Now I will pass the call over to Simon, who will provide an update on our second quarter's business progress and the financial results.

Thank you, Mr. Zhang. Thank you all for joining today's earnings conference call. I will now provide an overview of our operational highlights and financial results for the second quarter of 2025. Let's start with our operations. We continue to deliver steady and robust growth, once again setting new records across our key operating metrics this quarter. Fulfilled orders rose to 60.8 million, up 23.8% year-over-year, consistently outpacing broader freight industry trends. This performance was driven by the expansion of our user base -- of our shipper base and ongoing improvements in fulfillment efficiency.

Our fulfillment rate reached a historical high of 40.7% in the second quarter, an increase of nearly 7 percentage points from the prior year, marking yet another record for our platform. Notably, the average fulfillment rate among low and medium frequency direct shippers approached 60%, up almost 10 percentage points year-over-year.

Orders from these user groups now account for roughly 53% of total fulfilled orders, an increase from last quarter, reflecting ongoing optimization of our shipper user structure and our ecosystem's growing strength. These breakthrough results underscore the effectiveness of our differentiated operational strategy and lay a strong foundation for further service quality enhancement.

Moving to our user base. Our average shipper MAUs reached 3.16 million in the second quarter, up 19.3% year-over-year. Total shipper members surpassed 1.2 million by quarter end, another all-time high, driven primarily by growth in low and medium frequency direct shippers. Since its launch early last year, our 288 membership program has been well received with average monthly active members, exceeding 300,000 in the second quarter. Our 12-month rolling retention rate for shipper members remained above 80%, demonstrating our shippers' communities, strong loyalty and engagement.

Turning to the trucker side. The number of active truckers fulfilling orders through our platform over the past 12 months increased to 4.34 million, hitting a record high. Meanwhile, the next month retention rate for truckers we responded to orders consistently exceeded 85%. During the quarter, we further strengthened our trucker infrastructure, significantly enhancing other tracking completeness paving the way for high operational efficiency and a better fulfillment experience for truckers.

By offering high-quality freight orders along with improved guarantees and benefits, we grew our mini member trucker base to over 1 million. These members order acceptance frequency increased substantially, driving parallel growth in business scale and trucker engagement while further enhancing trucker stickiness.

Shifting now to monetization, supported by the dual engine of order growth and improved monetization efficiency. Revenues from our transaction service achieved another quarter of high-quality growth, rising 39.4% year-over-year to RMB 1.33 billion. Monetized order penetration reached 86.7%, up more than 5 percentage points from the prior year, while average monetization per order increased to RMB 25.2 from RMB 23.9.

Highly targeted operations within our service ecosystems are consistently strengthening our monetization capabilities. Leveraging the more sophisticated credit rating system and tiered incentive programs for truckers, we effectively addressed the diversified needs of both high-volume and long-tail shippers. These efforts safeguarded trucker income and retention while also enhancing both order volumes and monetization efficiency.

Looking ahead, we will continue to leverage our intelligent freight matching system and flexible subsidy strategies to further tap into high-value users monetization potentials. In parallel, our refined tiered approach to trucker operations will help accelerate the buildup of strategic core transportation capacity, fostering a virtuous cycle of healthy user growth and sustained improvement in monetization efficiency. We believe these initiatives will further strengthen our momentum in 2025, delivering long-term value for our platform and stakeholders.

Now I'd like to provide a brief overview of our 2025 second quarter financial results. Our total net revenues in the second quarter were RMB 3,239.1 million, representing a 17.2% increase year-over-year, primarily attributable to an increase in revenues from freight matching services. Net revenues from freight matching services including service fees from trade brokerage models, membership fees from listing models and commissions from transaction services were RMB 2,747.9 million in the second quarter representing an increase of 18% year-over-year, primarily due to the record increase in transaction service revenue.

Revenues from the freight brokerage service in the second quarter were RMB 1,177.9 million, representing an increase of 1.1% year-over-year, primarily attributed to an increase in service fee rate, partially offset by a decrease in transaction volume. Revenues from the freight listing service in the second quarter were RMB 242.9 million up 14.5% year-over-year, primarily due to the growing number of total payment members.

Revenues from the transaction service in the second quarter were RMB 1,327.1 million, up 39.4% year-over-year, primarily driven by increase in other volume penetration rates and per order transaction service fee. Revenues from value-added services in the second quarter were RMB 491.2 million, up 12.8% year-over-year. The increase was primarily due to growing demand for our credit solutions.

Second quarter cost of revenues was RMB 1,238.4 million, a decrease of 5.6% from RMB 1,312.1 million in the same period of 2024. The decrease was primarily due to decreases in VAT-related tax surcharges and other tax costs net of grants from government authorities. And these tax-related costs net of government grounds totaled RMB 1,087.1 million, representing a decrease of 7.6% from RMB 1,176.3 million in the same period of 2024, primarily due to a decrease in tax costs net of government refunds related to our freight brokerage service.

Our sales and marketing expenses in the second quarter were RMB 433.8 million compared with RMB 372.3 million in the same period of 2024. The increase was primarily due to an increase in advertising and marketing expenses for user acquisitions.

General and administrative expenses in the second quarter were RMB 170.3 million compared with RMB 219.2 million in the same period of 2024. The decrease was primarily due to lower share-based compensation expenses. R&D expenses in the second quarter were RMB 189.6 million compared with RMB 232.1 million in the same period of 2024. The decrease was primarily due to lower salary and benefit expenses.

Income from operations in the second quarter was RMB 1,139.6 billion, an increase of 101.6% from RMB 565.4 million in the same period of 2024. Net income in the second quarter was RMB 1,264.8 million, an increase of 50.5% from RMB 840.5 million in the same period of 2024.

Under non-GAAP measures, our adjusted operating income in the second quarter was RMB 1,230.1 million, an increase of 76% from RMB 699 million in the same period of 2024. Our adjusted net income in the second quarter was RMB 1,352.1 million, an increase of 39.3% from RMB 970.9 million in the same period of 2024.

Basic income per ADS was RMB 1.2 in the second quarter compared with RMB 0.79 in the same period of 2024. Non-GAAP adjusted basic net income per ADS was RMB 1.28 in the second quarter of 2025 compared with RMB 0.92 in the same period of 2024. Non-GAAP adjusted diluted net income per ADS was RMB 1.27 in the second quarter compared with RMB 0.91 in the same period of 2024.

As of June 30, 2025, the company had cash and cash equivalents, restricted cash, short-term investments, long-term time deposit and wealth management products with maturities over 1 year of RMB 29.5 billion in total compared with RMB 29.2 billion as of December 31, 2024.

As stated in our announcement on August 1, to ensure the sustainable development of our freight brokerage business, the company has decided to increase the freight brokerage service fee starting in August, aiming to reduce reliance on government subsidies and mitigate associated uncertainties. This adjustment may lead to higher cost for shippers, and we anticipate a significant decline in freight brokerage transaction volume beginning in the quarter ending September 30, 2025.

Consequently, revenues from freight brokerage business are expected to decrease, while costs are likely to rise, which may exert some pressure on profitability. That said, we expect the shift in the freight brokerage business will have limited impact on our transaction service business.

Based on this outlook, we expect our total net revenues to be between RMB 3.07 billion and RMB 3.17 billion for the third quarter of 2025, representing a year-over-year growth rate of approximately 1.3% to 4.6%. Excluding freight brokerage service, net revenues are expected to range from RMB 2.16 billion to RMB 2.26 billion reflecting an estimated year-over-year growth rate of 23.4% to 29.1%. These forecasts are based on our current and preliminary view of the market and operational conditions, which are subject to change and cannot be predicted with reasonable accuracy as of the date hereof.

That concludes our prepared remarks. We would now like to go -- like to open the call to Q&A. Operator, please go ahead.

[Operator Instructions] Your first question comes from Eddy Wang with Morgan Stanley.

My question is regarding the fulfilled orders. We have seen that fulfilled orders increased by 24% year-over-year in the second quarter, and the fulfillment rate increased to around 41% both maintained very strong growth momentum. What are the key factors driving this growth? How do you view the fulfilled order volume growth in the second half of this year as well as for the full year?

Thank you, Eddy. In the past second quarter, our fulfilled orders continue to increase steadily significantly outperforming the broader freight market. We attribute this strong growth to 3 key elements: our ongoing user base expansion, the optimization of shipper user structure in our product and service upgrades.

First, the consistently rapid expansion of both shippers and truckers user base has laid a solid foundation for other growth, a shipper side rising demand among the SME owners to reduce costs and improve efficiency along with leased appetite for digital and intelligent transformation has accelerated the shift of shippers from offline to online.

Our average monthly active shippers exceeded 3.16 million in the second quarter, hitting an all-time high. On the trucker side, more truckers who traditionally operated offline took orders through online platforms effectively boosting transportation capacity. The continued expansion on both the supply and demand sides has further supported order growth.

And second, the continued optimization of our super user base has driven stronger order stickiness. Our high-quality shipper segment were mostly low and medium frequency direct shippers have delivered consistent growth in average fulfilled orders per user, thanks to ongoing platform service refinements reflecting stronger retention and stickiness.

The other contribution of direct shipper further increased to 53% in the second quarter. That is up 4 percentage points year-over-year. In the meantime, our average fulfillment rate for these direct shippers surpassed 60% threshold for the first time. This user mix progress was a key structural driver of the overall increase in order volume and fulfillment rates.

Thirdly, our further upgraded products and operational strategies have strengthened the certainty level of order fulfillment. For example, in the second quarter, we rolled out an intelligent matching system that prioritized dispatching orders to truckers closest to the shipping location before gradually expanding outwards. This close to far strategy effectively cut down matching time and improve the truckers' order response efficiency and fulfillment reliability.

Meanwhile, on the shipper side, we have fine-tuned our shipper information intake process, helping truckers get a clearer and more complete picture of the cargo before accepting orders, which has reduced cancellation caused by information gaps. For the full year, we remain optimistic about the continued growth in our fulfilled orders. While the macro uncertainties are likely to persist in the second half, we feel our relatively positive outlook is justified given our leading edge and strong market position in the freight matching service and the online penetration is still low. We will continue optimizing user structure and enhancing service standards to keep driving higher-quality order conversions while also refining our product and service operations to boost user engagement and retention among small- and medium-sized shippers and core trucker groups. We're confident these efforts will further solidify our platform's industry leadership and bring us closer to our full year order growth target.

Your next question comes from Charlie Chen with China Renaissance.

In the second quarter, the number of monthly active shippers reached 3.16 million, representing a year-over-year growth of 19.3%. What are the main drivers behind this growth? And could you brief us on the progress of the shipper member business in the second quarter?

Thank you, Charlie. In the second quarter, the number of monthly active shippers maintained the solid growth trajectory we have observed in the past few quarters. This momentum was primarily driven by improved user acquisition efficiency and consistent enhancement to product experience. First, we continue to optimize our user acquisition strategy. We cut back on low conversion marketing and placement channels and shifted resources to high conversion channels, such as online app store advertising and achieving better ROI within a controlled budget.

New shippers wellness to engage and the conversion rate of their first postings to fulfillment both improved significantly driving ongoing improvements in the quality of new users.

Second, our efforts to increase engagement and retention among existing users contributed to the sustained MAU growth. We refined key features such as trucker trajectory completeness and real-time trucker locations enhancing shippers' confidence in our fulfillment capabilities. This posted both overall shipment frequency and fulfillment rates, elevating user stickiness.

Sequentially, our shipper MAU growth eased slightly quarter-over-quarter, mainly due to reduced activity among intermediary 1,688 member shippers as we stayed more focused on serving direct shippers and strengthening our platform service capabilities, fulfillment experience and matching efficiency, more direct shippers opt to post orders directly on to our platform, reducing the role of intermediary brokers. This shift was essentially an improvement in our platform's ecosystems quality, marking progress towards a more sustained shipper use cluster.

Regarding membership program, the number of shipper members continue to steadily increase in the second quarter with existing shipper members at 1.21 million by quarter end, this growth was primarily driven by our ongoing enhancements to our membership programs, effective execution of our tiered pricing strategies and stable retention among existing members.

The rapid growth of many member shippers remain the primary driver of shipper member growth, promotion for our 288 membership program effectively lowered the initial payment threshold driving first-time conversions among low and median frequency direct shippers. Data shows that our tiered approach to member operations has started to pay off. Notably, in the second quarter, among 288 members who used up their shipments -- used up their shipment allowance and choose to renew nearly 30% upgraded to the 688 membership demonstrating users increasing trust and reliance on our platform services.

In the meantime, retention among the existing shipper members remained stable. As of the end of the second quarter, our 12-month rolling retention rate for shipper members remained above 80%. This sustained high level over multiple quarters reflects our continuous efforts to improve member experience.

Looking ahead, we will continue to focus on high-quality direct shipper operations, expanding the share of core users while naturally phasing out intermediary shippers. In terms of the membership program, we will further enhance renewal rates for mini member shippers and encourage upgrades to higher tier members, leveraging our tiered approach to members, operations and targeted benefits. This will enable us to boost overall payment rates and user life cycle value, building our platforms, order growth and enhancing transaction quality.

Your next question comes from Wenjie Zhang with CICC.

I'll do the translation for myself. We know that in early July, several major domestic online freight platforms have jointly signed the industry sales regulation convention. Under the context, what measures have you put in place?

Thank you, Wenjie. It's a good question. The industry self-regulation convention aimed to protect truckers, legitimate rights and foster a healthier, more sustainable industry consistence. Our platform responded swiftly with supplementary guidance and various measures aimed at helping truckers take owners confidently and receive payment promptly and operate with the peace of mind. In terms of freight rate protection, we strengthened our oversight of shippers and provided truckers with robust support in resolving payment issues through both customer service and legal channels.

We have also expanded our freight rate protection program for eligible trucker members. For orders that are not settled on time, the platform will advance or partially cover payments per established rules ensuring that truckers' cash flow is more stable and predictable.

To improve transaction fairness, we have taken steps to cure market disrupting behaviors such as malicious order flipping, fake order taking and frequent cancellations. Leveraging algorithm monitoring and optimization, we're able to block ultra low-priced or otherwise unreasonable freight resources, helping safeguard truckers' earnings.

Shippers or truckers who violate platform rules may face account suspension or black listing. At the same time, we have made reporting channels more accessible, encouraging truckers to share tips and help maintain a transparent, fair trading environment. Finally, we are enhancing communication and feedback mechanism by regularly hosting discussion panels in person where truckers can share their thoughts what matters most to them, including rights protection and rule optimization.

We also gradually open channels for truckers to submit reports publicly shared feedback and track resolution so we can ensure closure of reported issues. These initiatives are designed to reinforce truckers' sensors security, satisfaction and trust when upgrading on our platform, while fostering a stable long-lasting partnership between the platform and the trucker community.

Your next question comes from Yuan Liao with Citic.

Congrats for the strong results in the second quarter. And we see that the company adjusted its free brokerage service on August 1. So what operational changes have been made at same? And you observed any user behavior shift? And how should we view the future prospects and the financial contribution of the [indiscernible] business.

In early August, in response to the upcoming cancellation of government grants, we promptly increased the fee rate for freight brokerage service to between 10% to 11% to cover, the increased tax costs and other operating cost is related to the business. At the operational level, we have been focused on strengthening existing customer communication and retention with emphasis on ensuring a seamless experience for shippers placing, invoicing and also freight matching orders. At the same time, we have continued to enhance our freight matching services to maintain stable fulfillment performance.

Early observations suggest that the retention of these users remain broadly in line with our expectations following the fee rate adjustment, confirming the core value of our platforms freight matching service in driving user engagement and loyalty. On group level, we believe the adjustments to our freight brokerage business will have limited impact on public management service. We expect that as other platforms will provide a similar freight broker service group -- services, complete fee rate adjustments sooner or later, those smaller players with limited value add other than low-priced invoice and service will exit the market eventually. This is likely to bring some users back to the FTA and support a new wave of consolidation in the freight sector, further highlighting the core value of our platform of our platform delivers to both shippers and truckers.

From a financial standpoint, we believe the reduced profit contribution of freight brokerage will, over the long run, help us optimize our revenue structure and key operating metrics, including profitability. It will also reduce cash flow uncertainty arising from receivables -- receivable local government grants, allowing our earnings to more accurately reflect the true value of our core operations and providing a stronger foundation for sustainable revenue and profit growth in the future.

Your next question comes from Ritchie Sun with HSBC.

I want to ask about the entrusted shipment business. So how did this segment performed in the second quarter? And on the operations side, what are the key initiatives involved?

Thank you, Ritchie. Since the beginning of the second quarter, we have reshuffled our entrusted shipment service as part of our broader business strategy optimization. Starting in April, we streamlined product offerings by discontinuing the instructed -- entrusted shipment carpooling service and focusing exclusively on the full truckload transactions under the entrusted shipment segment. This shift was driven by 2 considerations. First, from a product positioning perspective, the entrusted shipment business is built around providing a high-quality, highly reliable transportation experience for shippers with stringent requirements for timeliness and stability.

In contrast, lesson truckload carpooling services are primarily cost-driven, characterized by lower freight rates and less certainty in fulfillment. This inheritant mismatch with our brand positioning from to reshuffle the customer service and concentrate on our resources on to truckload offering and further enhancing the premium image of the entrusted shipment segment.

Second, from an operational efficiency standpoint, full truckload orders in the entrusted shipment business generally achieved higher freight rates and stronger fulfillment performance, making them more attractive to truckers. This advantage was amplified in May when we fully implement the price consistency mechanism under which freight rates for entrusted shipment orders are notably higher than standard freight orders.

The resulting income potential has increased trucker engagement and expanded the availability of high-quality transportation capacity on our platform. While the restructuring of services offering under entrusted shipment program led to a short-term slowdown in order volume growth, we believe this strategic adjustment will, over the medium to long term, strengthen user mindset with premium brand positioning, creating differentiated competitive advantages and help cultivate a higher-quality ecosystem of both shippers and truckers.

On the monetization front, the premium pricing strategy has created a more favorable revenue environment and improved stability in revenues from transaction service. Looking ahead, we will continue refining the shipment business model, focusing on the dual engines of efficient matching and premium service to further enhance user experience, deepen platform engagement and solidify its role as a core pillar of our product portfolio. Thank you.

And that concludes the question-and-answer session. I would like to turn the conference back over to management for any additional or closing comments.

Thank you once again for joining us today. If you have any further questions, please feel free to contact us at Full Truck Alliance directly or TPG Investor Relations. Have a good day. .

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