Bitauto (BITA) Tops Q4 EPS by 1c, Revenues Beat; Offers Q1 Revenue Guidance

Bitauto (NYSE: BITA) reported Q4 EPS of $0.23, $0.01 better than the analyst estimate of $0.22. Revenue for the quarter came in at $453.7 million versus the consensus estimate of $433.68 million.

Fourth Quarter and Fiscal Year 2018 Highlights

• Revenue in the fourth quarter of 2018 was RMB3.12 billion (US$453.7 million), a 25.2% increase from the corresponding period in 2017, exceeding the high-end of the Company guidance. Revenue in fiscal year 2018 was RMB10.58 billion (US$1.54 billion), a 31.0% increase from 2017.
• Gross profit in the fourth quarter of 2018 was RMB1.69 billion (US$246.0 million), an 8.9% increase from the corresponding period in 2017. Gross profit in fiscal year 2018 was RMB6.34 billion (US$921.4 million), a 16.7% increase from 2017.
• Loss from operations in the fourth quarter of 2018 was RMB325.3 million (US$47.3 million), compared to a loss from operations of RMB645.2 million (US$93.8 million) in the corresponding period in 2017. Loss from operations in fiscal year 2018 was RMB465.5 million (US$67.7 million), compared to a loss from operations of RMB1.08 billion (US$156.6 million) in 2017.
• Non-GAAP income from operations in the fourth quarter of 2018 was RMB265.4 million (US$38.6 million), a 183.9% increase from the corresponding period in 2017. Non-GAAP income from operations in fiscal year 2018 was RMB1.11 billion (US$161.6 million), a 26.7% increase from 2017.
• Net loss in the fourth quarter of 2018 was RMB398.3 million (US$57.9 million), compared to a net loss of RMB803.4 million (US$116.8 million) in the corresponding period in 2017. Net loss in fiscal year 2018 was RMB679.3 million (US$98.8 million), compared to a net loss of RMB1.43 billion (US$207.5 million) in 2017.
• Non-GAAP net income in the fourth quarter of 2018 was RMB199.0 million (US$28.9 million), a 101.0% increase from the corresponding period in 2017. Non-GAAP net income in fiscal year 2018 was RMB934.7 million (US$135.9 million), a 30.1% increase from 2017.
• Net loss attributable to Bitauto in the fourth quarter of 2018 was RMB416.7 million (US$60.6 million). Net loss attributable to Bitauto in fiscal year 2018 was RMB608.4 million (US$88.5 million).
• Non-GAAP net income attributable to Bitauto in the fourth quarter of 2018 was RMB118.6 million (US$17.2 million). Non-GAAP net income attributable to Bitauto in fiscal year 2018 was RMB708.9 million (US$103.1 million).
• Basic and diluted net loss per ADS in the fourth quarter of 2018 was RMB5.38 (US$0.78) and RMB5.38 (US$0.78), respectively. Basic and diluted net loss per ADS in fiscal year 2018 was RMB8.13 (US$1.18) and RMB8.13 (US$1.18), respectively.
• Non-GAAP basic and diluted net income per ADS in the fourth quarter of 2018 was RMB1.58 (US$0.23) and RMB1.45 (US$0.21), respectively. Non-GAAP basic and diluted net income per ADS in fiscal year 2018 was RMB9.62 (US$1.40) and RMB8.90 (US$1.29), respectively.

Mr. Andy Zhang, chief executive officer of Bitauto, said, "We were pleased to conclude 2018 with robust growth across all three of our business lines, amid softer passenger vehicle sales in China during the second half of the year. Our full year revenues increased by 31.0% over the previous year to RMB10.58 billion, and revenue in our advertising and subscription business reached RMB4.07 billion, representing 13.5% year-over-year growth. In particular, our core advertising and subscription business, which excludes contributions from subsidiaries in which we hold controlling interests, grew by 17.9% year-over-year for the full year. We also maintained strong growth in our transaction services business, with full year revenues increasing by 49.8% year-over-year to RMB5.37 billion. In our digital marketing solutions business, we recorded healthy revenue growth of 25.7% to RMB1.13 billion for the full year."

"Since the introduction of our upgraded Bitauto media app in October 2018, we have seen a significant surge in traffic, user time spent, and the number of sales leads generated. According to Questmobile, in February 2019 daily active users of the Bitauto media app increased by 135% as compared to October 2018. In our subscription business, we further improved our ARPU in the fourth quarter attributable to the migration of more members to our premium service packages. We also made progress in building out our independent dealer network and covered over 22,000 independent dealers in the fourth quarter. As of the end of this February, we had developed over 1,000 paying customers among the independent dealers."

"In our transaction services business, Yixin delivered steady results as its services continued to gain traction in the market. Yixin facilitated approximately 143,000 financed automobile transactions in the fourth quarter, while loan facilitation services contributed 60% of Yixin's total financed automobile transactions, up significantly from 24% in the previous quarter. We expect Yixin's loan facilitation services to continue growing in the following quarters."

"Looking to the year ahead, we are cautiously optimistic about the outlook for China's automobile industry, and we remain confident in our core business strategies to build Bitauto into China's top online auto media and transaction services platform. First, we will continue to improve content and user experience on the upgraded Bitauto media app to further solidify our leading industry position. With a wider range of engaging, user-centric content, our Bitauto media app's ability to fulfill user needs across the entire automobile consumption cycle including automobile research, purchase, ownership and replacement is driving popularity among automobile consumers. Moreover, since a majority of users log on before they browse the app's content, we are able to optimize our user profile database and improve the quality of the sales leads generated. We believe our upgraded media app will continue to enhance the value of the Bitauto brand and help reduce our customer acquisition costs going forward. Second, we will drive incremental revenue growth in our advertising business through data products which provide automakers with integrated results-driven marketing solutions. Building upon our extensive industry knowledge as well as our AI and big data analytic capabilities, our data products will allow automakers to roll-out highly targeted advertisements, content and marketing campaigns to achieve higher conversion results. Third, we will further develop our independent dealer network and expect to start monetization in 2019. As our subscription products already enjoy a high penetration rate in the new car 4S dealer market, we will look to further drive subscription revenue growth by offering tailored solutions for independent dealers, a vast and under-tapped market segment in China. Fourth, Yixin will remain focused on rapidly expanding its loan facilitation business, which is highly scalable and features a more attractive margin profile than its self-operated financing business. We believe that Yixin is well-positioned to gain market share in the automobile finance industry."

Mr. Ming Xu, chief financial officer of Bitauto, said, "We achieved solid top-line growth in the fourth quarter of 2018, with strong results across our advertising and subscription as well as transaction services businesses. Yixin saw healthy top-line results driven by solid growth in its total financed transaction volume, especially the rapid growth in its loan facilitation business. While we incurred additional marketing expenses during the quarter due to marketing campaigns to support our updated media app, we still saw margin expansion within our advertising and subscription business for the full year. Looking forward, with these factors behind us, we are optimistic about our margin outlook as we implement cost control measures and as Yixin enhances profitability through accelerating growth in its loan facilitation business."

GUIDANCE:

Bitauto sees Q1 2019 revenue of $359.2-366.5 million, versus the consensus of $364.11 million.

For earnings history and earnings-related data on Bitauto (BITA) click here.

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