Bitauto (BITA) Misses Q3 EPS by 28c, Revenues Miss; Offers Q4 Revenue Guidance Below Consensus

Bitauto (NYSE: BITA) reported Q3 EPS of $0.11, $0.28 worse than the analyst estimate of $0.39. Revenue for the quarter came in at $355.5 million versus the consensus estimate of $378.08 million.

Bitauto Third Quarter 2019 Highlights

• Revenue in the third quarter of 2019 was RMB2.54 billion (US$355.5 million), compared to RMB2.72 billion (US$381.2 million) in the corresponding period in 2018.
• Gross profit in the third quarter of 2019 was RMB1.58 billion (US$220.5 million), compared to RMB1.67 billion (US$233.8 million) in the corresponding period in 2018.
• Net loss in the third quarter of 2019 was RMB161.5 million (US$22.6 million), compared to net loss of RMB20.1 million (US$2.8 million) in the corresponding period in 2018. Non-GAAP net income in the third quarter of 2019 was RMB109.4 million (US$15.3 million), compared to Non-GAAP net income of RMB345.0 million (US$48.3 million) in the corresponding period in 2018.
• Net loss attributable to Bitauto in the third quarter of 2019 was RMB164.7 million (US$23.0 million), compared to net loss attributable to Bitauto of RMB26.7 million (US$3.7 million) in the corresponding period in 2018.Non-GAAP net income attributable to Bitauto in the third quarter of 2019 was RMB51.9 million (US$7.3 million), compared to Non-GAAP net income attributable to Bitauto of RMB265.8 million (US$37.2 million) in the corresponding period in 2018.

Mr. Andy Zhang, chief executive officer of Bitauto, said, "As new passenger vehicle sales in China have decreased over the past fifteen months, automakers and dealers have become more cautious in their marketing spending. Amid this unfavorable environment, Bitauto's total revenue was RMB2.54 billion for the third quarter of 2019. Our transaction services business, however, continued to gain market share with revenue increasing by 3.9% year-over-year to RMB1.42 billion."

"Since rolling out our upgraded Bitauto media app in the fourth quarter of last year, we have been pleased to see continuous improvements in our mobile traffic and the quality and quantity of our sales leads. According to QuestMobile, in October 2019 daily active users (DAU) of the Bitauto media app increased by 255% over the same period in 2018. Also, the combined DAU of both the Bitauto media app and our Auto Pricing app increased by 55% over the same period in 2018. Our number of sales leads grew by 6% year-over-year in the third quarter despite declining new car sales, with a significant increase in the proportion of organic sales leads to over 60% of our total sales leads. Meanwhile, conversion rates as measured by store visits and number of transactions continue to rise, indicating the improved quality of our sales leads."

"We also made steady progress in expanding our new business areas. We have received positive feedback from automakers on our AI-based marketing solution which we launched earlier this year and we continued to grow our network of independent dealers to over 33,000 during the third quarter with more than 4,400 paying customers as of the end of October."

"We have recently stepped up our strategic marketing spending to strengthen the Bitauto brand and improve our brand recognition among automobile consumers. We view this as an investment to broaden our user base and better help our automaker and dealer customers. As more car buyers and owners view us as the app of choice for car-related information and services, our customer acquisition costs will also decline in the long run."

"In our transaction services business, Yixin further expanded its loan facilitation services business, which grew 213% year-over-year and contributed approximately 73% of total financed transactions. During the quarter, Yixin also further tightened its risk control standards to better adjust to China's slower economic growth and changing regulatory environment."

"Looking forward, we will remain focused on our core business strategies. First, we will help drive higher ROI for our automaker and dealer customers by bringing them more high-quality sales leads. Second, we will work towards rolling out our AI-based marketing solution, which provides automakers with tailor-made and result-driven marketing tools, to all mainstream automakers by the end of this year. Third, we will further improve the revenue mix of our subscription business by migrating more dealer customers to premium and deluxe premium packages and expanding our network of 4S and independent dealers. Fourth, Yixin will continue to grow its loan facilitation services, enhance risk management, and improve its product offerings."

Mr. Ming Xu, chief financial officer of Bitauto, said, "In the third quarter we continued to devote resources to enhancing content and user engagement, as well as improving the quantity and quality of our sales leads. We also introduced new marketing initiatives to strengthen Bitauto's brand image among automobile consumers. While these investments will lead to higher operating expenses in the near term, we expect them to help reduce customer acquisition costs and enhance the competitiveness of our product offerings over the long run. We are confident that Bitauto is well-positioned to weather the automobile industry downturn by bringing exceptional value to our increasingly ROI-focused automaker and dealer customers."

GUIDANCE:

Bitauto sees Q4 2019 revenue of $342.8-356.8 million, versus the consensus of $412.8 million.

Bitauto currently expects to generate revenue in the range of RMB2.45 billion (US$342.8 million) to RMB 2.55 billion (US$356.8 million) in the fourth quarter of 2019.

This forecast takes into consideration of seasonality factors in Bitauto's business, and excludes any impact of foreign currency fluctuation. It reflects the management's current and preliminary view, which is subject to change.

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

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